Dana Incorporated (NYSE: DAN) reported fiscal Q3 2026 sales of $2.038 billion, up 6.3% from $1.917 billion, while diluted EPS from continuing operations moved to a loss of $0.13 from earnings of $0.07. Adjusted EBITDA rose 34.6% to $218 million, with margin expanding 220 basis points to 10.7% as commercial-vehicle demand, cost savings, and operating efficiencies improved underlying performance. Debt-extinguishment and tax charges pushed continuing operations into a GAAP loss, while adjusted free cash flow declined to $66 million.
Core Earnings Data
For the quarter ended September 30, sales increased by $121 million, primarily due to stronger commercial-vehicle demand, backlog conversion, and commercial and cost-recovery actions. Dana also reported $60 million of year-to-date cost savings, which—together with operational efficiency and commercial initiatives—supported the adjusted EBITDA improvement.
The gap between GAAP and adjusted earnings was substantial. Continuing operations lost $10 million, but adjusted EPS turned positive after excluding discontinued operations and specified restructuring, transaction, debt, and tax items.
| Metric | Q3 2026 | Q3 2025 | Year-over-Year Change |
|---|---|---|---|
| Sales | $2.038 billion | $1.917 billion | About +6.3% |
| Earnings from continuing operations before interest and taxes | $92 million | $53 million | About +73.6% |
| Net income (loss) from continuing operations | $(10) million | $13 million | Profit-to-loss swing |
| Net income attributable to Dana | $15 million | $83 million | About -81.9% |
| Diluted EPS from continuing operations | $(0.13) | $0.07 | Earnings-to-loss swing |
| Diluted adjusted EPS | $0.41 | $(0.04) | Loss-to-profit swing |
| Adjusted EBITDA | $218 million | $162 million | About +34.6% |
| Adjusted EBITDA margin | 10.7% | 8.5% | +220 basis points |
| Operating cash flow | $102 million | $111 million | About -8.1% |
| Adjusted free cash flow | $66 million | $101 million | About -34.7% |
Adjusted EBITDA, adjusted EPS, and adjusted free cash flow are non-GAAP measures and may not be directly comparable with similarly named measures reported by other companies.
Business and Segment Performance
Commercial Vehicle produced $103 million of Dana’s $121 million sales increase, or roughly 85%, making it the primary growth driver. Both operating segments increased adjusted EBITDA, while corporate expense and other items became less negative.
| Segment | Q3 2026 Sales | Q3 2025 Sales | Q3 2026 Adjusted EBITDA | Q3 2025 Adjusted EBITDA |
|---|---|---|---|---|
| Light Vehicle | $1.371 billion | $1.353 billion | $151 million | $126 million |
| Commercial Vehicle | $667 million | $564 million | $69 million | $51 million |
| Corporate expense and other items, net | — | — | $(2) million | $(15) million |
Light Vehicle sales increased only about 1.3%, but its adjusted EBITDA rose by $25 million. Commercial Vehicle sales grew about 18.3%, accompanied by an $18 million increase in adjusted EBITDA. The $13 million improvement in corporate expense and other items also contributed materially to the companywide EBITDA gain.
Operating Gains Were Offset by Debt and Tax Charges
Dana’s continuing operating performance improved, and interest expense fell to $20 million from $47 million. Earnings from continuing operations before income taxes consequently rose to $52 million from $9 million despite a $24 million loss on debt extinguishment.
That pre-tax improvement did not reach the GAAP bottom line because income tax expense reached $64 million, compared with a $2 million benefit a year earlier. The quarter included a $29 million charge related to a foreign income-tax settlement, partly offset by a $12 million benefit associated with restructuring following the Off-Highway sale. After taxes and affiliate earnings, continuing operations recorded a $10 million loss.
Discontinued operations contributed $29 million of net income, bringing total net income to $19 million and net income attributable to Dana to $15 million. On an adjusted basis, net income improved to $44 million from a $5 million loss, illustrating how debt, tax, transaction, and discontinued-operation items masked the underlying operating improvement.
Cash Flow and Balance Sheet
Total operating cash flow declined modestly to $102 million, but its composition changed significantly. Continuing operations generated $112 million, compared with a $28 million use of cash a year earlier, while discontinued operations used $10 million after contributing $139 million in Q3 2025.
Adjusted free cash flow fell by $35 million to $66 million. Dana attributed the pressure to the absence of cash generation from the divested Off-Highway business, higher capital spending, and working-capital timing, partly offset by better continuing earnings and lower one-time costs, interest, and cash taxes. Capital expenditures for continuing operations increased to $70 million from $49 million.
For the first nine months, adjusted free cash flow was negative $61 million, compared with negative $7 million a year earlier. Based on the unchanged full-year target of $275 million to $375 million, Dana would need approximately $336 million to $436 million of adjusted free cash flow in Q4 to reach the range.
Cash and cash equivalents stood at $321 million on September 30, down from $469 million at the end of 2025. The combined balance of short-term debt, the current portion of long-term debt, and long-term debt was approximately $1.58 billion, down from about $3.21 billion at year-end. Dana’s nine-month cash flow statement included $2.526 billion of investing cash inflows from discontinued operations and $1.821 billion of long-term debt repayments.
Eaton Mobility Transaction and Capital Allocation
Dana said the Eaton Mobility transaction remains on track to close around the end of Q1 2027. Nearly all regulatory approvals have been received, with one still pending.
The company repurchased approximately 6.6 million shares for $200 million during Q3, bringing year-to-date repurchases to $369 million. Dana plans to repurchase approximately another $100 million in Q4 2026 as part of its increased capital-return activity ahead of the transaction’s expected closing.
Full-Year Guidance
Dana raised its 2026 sales outlook by approximately $50 million to reflect higher demand and recoveries. It maintained its adjusted EBITDA, diluted adjusted EPS, and adjusted free cash flow targets, so the higher sales outlook has not yet translated into a higher full-year adjusted profit target.
| Metric | Updated 2026 Target | Change |
|---|---|---|
| Sales | $7.75 billion-$7.85 billion | Raised by approximately $50 million |
| Adjusted EBITDA | $800 million-$850 million | Maintained |
| Implied adjusted EBITDA margin | About 10.6% | Implied by current targets |
| Diluted adjusted EPS | $1.75-$2.25 | Maintained |
| Adjusted free cash flow | $275 million-$375 million | Maintained |
Risks Investors Should Monitor
- Fourth-quarter cash conversion: Nine-month adjusted free cash flow was negative $61 million, leaving a large Q4 contribution necessary to achieve the unchanged full-year target.
- Dependence on Commercial Vehicle growth: Commercial Vehicle accounted for roughly 85% of the quarterly sales increase, concentrating growth in stronger demand and backlog conversion within that segment.
- GAAP earnings volatility: Debt-extinguishment and discrete tax charges more than offset improved operating performance in Q3, producing a continuing-operations loss despite higher pre-tax earnings.
- Transaction execution: The Eaton Mobility combination still requires one regulatory approval, and its timing and anticipated benefits remain dependent on successful closing, financing, and integration.
- Capital allocation and liquidity: Q3 share repurchases of $200 million exceeded quarterly adjusted free cash flow of $66 million, with another approximately $100 million planned for Q4 while cash remained below its year-end level.
Summary
Dana’s Q3 2026 results showed a clear improvement in underlying profitability, driven mainly by Commercial Vehicle demand, cost savings, operational efficiency, and lower corporate expense. Debt and tax charges prevented that progress from producing a GAAP profit from continuing operations, while cash generation remained below the prior year. The main issues to track are Q4 free cash flow, the concentration of growth in Commercial Vehicle, and completion of the Eaton Mobility transaction around the end of Q1 2027.
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