Dana NYSE: DAN reported higher second-quarter sales, earnings and cash flow, citing pricing actions, cost savings, favorable mix and improving commercial-vehicle demand. The company also raised its full-year outlook and said it would resume share repurchases before the expected close of its Eaton Mobility transaction in the first quarter of 2027.
Second-quarter sales totaled $2.01 billion, up from $1.94 billion a year earlier, while adjusted EBITDA rose to $207 million from $147 million. Adjusted EBITDA margin expanded 270 basis points year over year to 10.3%.
Chief Executive Officer Byron Foster said the quarter reflected continued execution of Dana’s operational and strategic plans. The company generated $19 million in cost savings during the quarter, bringing year-to-date savings to $54 million and keeping it on track for its $65 million cost-savings target for 2026. Dana said its broader cost-reduction program is targeting $325 million.
Adjusted net income increased to $21 million from $4 million in the prior-year quarter, while diluted adjusted earnings per share rose to $0.19 from $0.03. Net interest expense declined 59% year over year to $17 million following debt repayment actions undertaken after the company’s off-highway divestiture.
Sales, margins and cash flow improve
Chief Financial Officer Timothy Kraus said the $75 million year-over-year sales increase included $29 million from performance, primarily pricing and recovery actions; $24 million from foreign currency translation; $12 million from commodity recoveries; and about $4 million from tariff recoveries. Volume and mix added $6 million.
On the profit side, volume and mix added $10 million of adjusted EBITDA, performance added $29 million, and cost savings contributed $19 million. Tariffs added $4 million and foreign exchange contributed $2 million, while commodities represented a $3 million headwind due largely to the timing of customer recovery mechanisms, Kraus said.
Dana generated $68 million of adjusted free cash flow in the second quarter, a $75 million improvement from the prior-year period. Kraus attributed the increase to improved earnings, lower interest expense and a $79 million benefit from working capital and other items, including favorable accounts-payable timing and lower inventory. Higher capital spending partially offset those gains.
Full-year outlook raised
Based on first-half performance and strengthening demand in commercial vehicles, Dana raised its 2026 outlook. The company now expects approximately $7.75 billion in sales at the midpoint, up $225 million from its previous forecast, and adjusted EBITDA of approximately $825 million at the midpoint, an increase of $25 million.
The company continues to expect an adjusted EBITDA margin of about 10.6%, noting that higher sales in its lower-margin commercial-vehicle business limit the margin benefit. It raised its adjusted free-cash-flow outlook by $25 million to approximately $325 million.
Dana reduced its midpoint diluted adjusted EPS outlook to approximately $2. Kraus cited higher depreciation expense associated with the timing of capital investments, higher interest expense as the company prepares for the Eaton Mobility transaction, lower equity earnings from Chinese joint ventures, and tax effects related to jurisdictional mix.
The updated outlook includes an approximately $20 million one-time U.S. union contract signing bonus expected in the third quarter. Kraus said wage increases were already included in Dana’s outlook and long-term plan, while the ratification bonus had not been anticipated in prior guidance.
For the second half, Dana expects operational performance and mix to improve further, including benefits from automation, plant-floor improvement initiatives and the anticipated elimination of about $40 million in stranded costs related to the off-highway sale.
Share repurchases and Eaton Mobility transaction
Dana repurchased 1.2 million shares for $44 million during the second quarter, bringing year-to-date repurchases to $169 million. Foster said the company plans an additional $200 million of repurchases during the remainder of 2026. Program-to-date repurchases totaled $819 million through the second quarter, and the planned purchases would bring that figure to more than $1 billion.
The company said its agreement with Eaton allows it to restart repurchases before the transaction closes. Dana is also evaluating whether it can continue repurchases after closing, potentially avoiding a previously announced 24-month pause. Kraus said that if buybacks cannot resume during that period, Dana could consider increasing its dividend or paying a special dividend.
Eaton has elected to separate its Mobility business through a split-off structure. Foster said the transaction is expected to remain tax-free to shareholders, while Eaton shareholders will have the option to participate in the exchange offer. Dana reiterated its expectation that the transaction will close in the first quarter of 2027.
The company expects the combination to generate at least $250 million of run-rate cost synergies within 24 months after closing, including about $75 million in the first year and roughly $200 million by the second year. Dana expects total cash costs to achieve those synergies to be less than $250 million, with a payback period of less than two years.
Growth initiatives in aftermarket and defense
Dana highlighted progress under its Dana 2030 plan, which includes growth through traditional products, aftermarket and Applied Technologies. The company said expanded distribution, product and SKU initiatives with AutoZone, Advance and O’Reilly are expected to deliver $40 million in additional sales from those retail chains.
A new partnership with heavy-duty truck parts group VIPAR is expected to add $10 million to $15 million in aftermarket sales beginning later this year, according to Foster. The company also cited increased defense-related demand, including on GM Defense’s ISV program, and said current demand and programs are expected to contribute $30 million in new sales.
Foster said Dana remains focused on reaching approximately $10 billion in standalone revenue by 2030. With Eaton Mobility, the company is targeting $14 billion to $15 billion in 2030 sales, along with higher margins and stronger free-cash-flow generation.
About Dana (NYSE:DAN)
Dana Incorporated is a global leader in the design and manufacture of drivetrain, sealing, and thermal-management technologies for the automotive, commercial vehicle, off-highway and industrial markets. The company's product portfolio includes axles, driveshafts, transmissions, e-Propulsion systems and thermal-management assemblies that help improve fuel efficiency, reduce emissions and enhance vehicle performance. Dana's expertise spans internal combustion and electrified powertrains, positioning it to support both traditional and next-generation mobility solutions.
Founded in 1904 by Clarence W.
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