Dana Targets $11B Revenue Through Eaton Mobility Deal as Margins Rise

Key Points

• Dana’s planned combination with Eaton’s Mobility Group, expected to close in early 2027, would expand revenue to more than $11 billion and target roughly 15% EBITDA margins, with $250 million in synergies expected within two years.
• Third-quarter revenue topped $2 billion, while EBITDA rose to $218 million and margin improved 220 basis points to 10.7%. Dana says it has delivered most of its expanded $325 million cost-reduction target.
• Dana has repurchased just over $1 billion under its $2 billion buyback authorization and plans $469 million in buybacks this year; it also aims to reduce leverage to about 1x through the business cycle.

Dana NYSE: DAN outlined its strategy for expanding its powertrain business through a pending combination with Eaton’s Mobility Group, while highlighting third-quarter margin gains, cost reductions and continued share repurchases.

Chief Executive Officer Byron Foster said Dana expects to finish the year with roughly $7.8 billion in revenue before the planned transaction. The company operates in 24 countries, with nearly 70 manufacturing facilities, 11 technology centers and more than 5,000 customers across original equipment manufacturers and aftermarket channels.

Foster said Dana reported third-quarter revenue of just over $2 billion, up $121 million from the prior-year period. EBITDA rose $56 million to $218 million, while EBITDA margin increased 220 basis points to 10.7%.

Cost Program Near Completion

The company began a cost-savings effort at the end of 2024 alongside the sale of its off-highway business. Dana initially targeted $200 million of cost reductions before increasing the goal to $325 million.

Foster said the company has delivered $60 million year to date and has about $5 million remaining to complete the program. The effort is intended to improve competitiveness and margins while addressing stranded costs associated with the off-highway divestiture.

Chief Financial Officer Tim Kraus said Dana is still working through transition service agreements with Allison following the sale, though he said the company is “in really good shape” regarding stranded costs. He also pointed to opportunities to redirect certain shared-services resources toward the combined business following the Eaton transaction.

Eaton Mobility Combination Expected to Close in 2027

Dana expects its Reverse Morris Trust transaction with Eaton’s Mobility Group to close at the end of the first quarter of 2027. Foster said the combination would increase the company’s revenue base from roughly $7.5 billion to more than $11 billion and lift combined EBITDA margins to about 15%.

The companies have identified $250 million in synergies to be delivered within the first two years after closing. Kraus said the most immediate areas include overlapping corporate and business-unit costs, engineering operations, technology centers and purchasing.

“We’re really looking at this clean sheet basis,” Kraus said, describing a “best athlete approach” intended to select capabilities from both organizations.

Foster said the transaction would expand Dana’s powertrain portfolio, combining Dana’s axle and driveshaft offerings with Eaton Mobility’s transmission products. The deal is also expected to double Dana’s aftermarket business, which Foster said will represent more than 10% of total company revenue.

The enlarged aftermarket operation could help offset the cyclicality of Dana’s light-vehicle and commercial-vehicle markets, according to Kraus. Dana has been investing in product offerings, distribution and customer service, while seeking to expand its presence with larger retail channels. Foster cited AutoZone as a customer with which Dana is increasing its distribution-center participation.

Electrification Strategy Shifts Toward Core Platforms

Foster said Dana developed substantial electrification capabilities during the earlier buildout of electric-vehicle programs, though some products did not reach the market. The company is retaining those capabilities but has adjusted its approach.

Dana is now focusing product development on core platforms that can be used across multiple customers rather than on bespoke products for individual vehicle programs, Foster said. He added that the company is becoming more selective about electric-vehicle projects and is unwilling to bear all the risk associated with them.

While Dana has one or two electrification projects launching, Foster said most development activity and new programs currently involve internal-combustion-engine or hybrid products. In heavier-duty vehicle categories, including off-road applications and pickup trucks, he said the company is discussing range-extended EV configurations that combine onboard generators with smaller electrified axles.

Foster also cited continued demand in Dana’s traditional light-vehicle business, including the Ford Super Duty platform, and said the company sees additional opportunities in defense and powersports through its Applied Technologies initiative.

Capital Allocation and Buybacks

Dana announced a $2 billion share repurchase authorization at the end of 2024 and has repurchased just over $1 billion to date, Foster said. The company increased its planned buybacks for the current year by $100 million, bringing the total planned amount to $469 million.

Kraus said Dana expects to exit the Eaton transaction with net leverage of approximately 1.5x to 1.6x. The company’s longer-term goal is to reduce leverage to about 1x through the business cycle, using excess cash flow before resuming repurchases after restrictions related to the Reverse Morris Trust structure expire.

Although Dana continues discussions with Eaton regarding post-closing repurchases, Kraus said management intends to complete the authorized $2 billion buyback program as soon as possible, targeting early 2029.

About Dana (NYSE:DAN)

Dana Incorporated NYSE: DAN is a global supplier of drivetrain, motion, and thermal-management technologies for the automotive, commercial-vehicle, and off-highway industries. The company develops systems that help vehicles transmit power, manage heat, and operate efficiently across conventional, hybrid, and electric powertrains.

Dana's products include axles, driveshafts, gearboxes, transmissions, sealing solutions, thermal-management systems, and components for electrified propulsion.

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