Dana (NYSE:DAN) executives used the company’s fourth-quarter and full-year 2025 earnings call to highlight stronger-than-expected fourth-quarter results, a record level of annual free cash flow since 2013, and the balance sheet reset that followed the sale of its Off-Highway business. Management also reaffirmed 2026 guidance and previewed “Dana 2030” financial targets ahead of a planned March 25 Capital Markets Day in New York.
Leadership transition and 2025 wrap-up
Chairman and CEO Bruce McDonald opened the call by noting that Byron Foster, currently president of the Light Vehicle Systems Group, will become the company’s incoming CEO. McDonald said Foster and the management team were instrumental in Dana’s cost reduction efforts, transformation plans, and development of its Dana 2030 strategy, and described the leadership change as a “seamless transition” expected to run through the end of the second quarter.
He also highlighted progress on cost reduction. Management initially committed to a $200 million run-rate savings target, later raised to $300 million, and said Dana delivered $248 million of cost savings in 2025 and exited the year with a $325 million run rate heading into 2026. McDonald added that the company has discussed about $40 million of stranded costs following the Off-Highway sale and said the company is assuming it will “substantially eliminate” those costs in 2026.
Fourth-quarter and full-year 2025 results
CFO Timothy Kraus reported fourth-quarter 2025 sales of $1.867 billion, up $93 million year over year, driven primarily by customer recoveries and currency translation. Adjusted EBITDA was $208 million, for an 11.1% margin, which Kraus said was a 640-basis-point improvement versus the prior-year fourth quarter, reflecting better mix and benefits from cost actions. EBIT from continuing operations was $61 million compared with a loss of $117 million a year earlier.
Fourth-quarter interest expense was $49 million, up about $12 million year over year due to higher average borrowing costs tied to accelerated capital return initiatives. Operating cash flow in the quarter was $406 million, up $104 million, which Kraus attributed to higher earnings and working-capital discipline.
For the full year, Kraus said 2025 sales were $7.5 billion, down $234 million from 2024, reflecting weakening market demand in both light vehicle and commercial vehicle sectors, partially offset by customer recoveries. Full-year adjusted EBITDA was $610 million, up $215 million, for an 8.1% margin (up 300 basis points). EBIT from continuing operations was $138 million compared with a loss of $176 million in 2024. Operating cash flow was $512 million, up $62 million.
Management emphasized that discussed results reflect continuing operations, with Off-Highway classified as discontinued operations, except for adjusted free cash flow, which includes both continuing and discontinued operations.
Cash flow, capital returns, and post-divestiture balance sheet
Kraus said adjusted free cash flow improved $250 million year over year to $331 million in 2025, driven by higher profitability, working-capital improvements, and lower capital spending. He noted a $215 million improvement from adjusted EBITDA in continuing operations, partially offset by $86 million lower profit from discontinued operations, higher one-time costs related largely to restructuring and strategic initiatives, and increased interest expense tied to capital return funding.
McDonald detailed capital return actions, stating the company returned “just over $700 million” to shareholders in 2025 through share repurchases and dividends, and increased the quarterly dividend 20% to $0.12 per share. He said Dana repurchased a little over 34 million shares in 2025 at an average cost of $18.96 and paid $54 million in dividends. In the first quarter of 2026, he said the company had already repurchased $100 million of shares at “a little bit over $27 a share,” and expected “another couple hundred million” of buybacks during the rest of the year. Dana also increased its total share repurchase authorization plan to $2 billion through 2030, which McDonald said reflects confidence in longer-term targets.
On the balance sheet, Kraus said the Off-Highway divestiture closed January 1 and most of the $2 billion in proceeds were used to repay debt. He said Dana ended January 2026 with $659 million in cash and total liquidity of about $1.8 billion, including revolver capacity of just over $1.1 billion, and expects an average cash balance of about $400 million going forward.
Kraus said total debt was reduced by approximately $1.9 billion following the transaction, leaving no near-term maturities and a first maturity in 2029 of just over $200 million. He added that remaining debt carries an average interest rate of around 6% and that the deleveraging results in less than 1x net leverage through 2026. Kraus also said Fitch and S&P upgraded Dana following the deleveraging actions.
2026 outlook and market assumptions
Foster said the 2026 plan assumes flat year-over-year volume in light trucks and commercial vehicles versus 2025, while noting “some optimism” for improved commercial vehicle volumes in the back half of the year. He also discussed a shift in customer product planning, saying new business pursuit activity has pivoted from being heavily EV-focused a few years ago toward a mix weighted more to traditional ICE powertrains, with hybrids and BEVs still present but at lower rates than previously expected.
Kraus reaffirmed Dana’s 2026 guidance, unchanged from the company’s January call:
- Sales: approximately $7.5 billion
- Adjusted EBITDA: around $800 million (about 10%–11% margin at the midpoint)
- Diluted adjusted EPS: $2.50 at the midpoint, based on about 109 million shares and excluding future repurchases
- Adjusted free cash flow: around $300 million
In the 2026 bridge, Kraus said volume and mix were expected to reduce revenue by about $95 million, with softer commercial vehicle demand and ongoing softness in EV light-vehicle platforms impacting battery and electronics cooling. He said performance was expected to reduce sales by about $30 million, while tariffs (+$50 million), currency (+$60 million), and commodities (+$15 million) were expected to be tailwinds.
For adjusted EBITDA, Kraus said volume and mix would add about $20 million, performance would add about $100 million (including an assumption of eliminating about $40 million of post-divestiture stranded costs), and additional cost savings would add $65 million. Tariffs were expected to be a $10 million tailwind and commodities a $15 million headwind.
Dana 2030 targets and what management said is driving them
Foster previewed the company’s Dana 2030 financial targets, including “close to $10 billion” of sales by 2030, EBITDA margins of 14%–15%, and adjusted free cash flow at 6%. Management also reiterated a plan to return $2 billion through stock buybacks by 2030, noting $650 million was completed in 2025 and the company is targeting $300 million of buybacks in 2026, alongside the previously announced dividend increase.
During Q&A, management said there is no M&A embedded in the $10 billion revenue target. McDonald described several contributors to the growth plan, including expectations for additional new program wins as customers adjust plans toward more ICE and hybrid vehicles, potential normalization in the North American commercial vehicle market, growth in aftermarket (including a North American sealing and gasket opportunity management described as a $250 million opportunity), selected EV opportunities such as range-extended products, and “Applied Technologies” opportunities in adjacent markets such as powersports and defense.
On margin expansion to 2030, management repeatedly pointed analysts to the upcoming Capital Markets Day for detail, but McDonald said the margin improvement is expected to be driven primarily by investments and cost actions—particularly in manufacturing operations and automation—rather than being solely dependent on revenue growth.
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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