Q3 2025 Dana Inc Earnings Call

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 Speakers' remarks, and Q&A session will be recorded for replay purposes.

Dan Levy: Foreign.

Speaker #3: 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 .

Regina: 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.

For those participants who would like to access the call from the webcast. Please reference the U R. L on our website and sign in as a guest there will be a question and answer period. After the Speakers' remarks, and we will take questions from the telephone only.

Speaker #3: 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 .

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 any additional questions. Please return to the queue.

Speaker #3: 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 .

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.

Speaker #3: 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 .

Thank you Virginia.

Can get incorporated earnings call.

Okay.

Speaker #3: 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 .

Today's presentation includes forward looking statements.

Regina: 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.

Our expectations for Dana's future performance actual results could differ from what we presented here today for more details about the factors that may affect future results. Please refer to our safe Harbor statement found.

Speaker #3: Please go ahead . Mr. Barber .

Speaker #4: 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 .

Bruce McDonald: 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 pmpd. 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.

And in our reports.

I encourage you to visit our Investor website, where you'll find this morning's press release and presentation.

Speaker #4: 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 filed .

As good as soon as coal is being recorded and the supporting materials for the property.

It incorporated they may not be recorded copied or rebroadcast without our written.

With me this morning.

Speaker #4: I encourage you to visit our investor website where you will 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 .

Sure.

Executive Officer, and Timothy Cross Senior Vice President and Chief Financial Officer, Bruce cultures, Thanks, Greg and good morning, everyone and thanks for joining Craig Tim and I for a discussion here on Dana's Q3 earnings.

Speaker #4: 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 .

Timothy Kraus: Rebroadcast without our written consent.

Bruce McDonald: With me this morning is Bruce McDonald, Dana Chairman and Chief Executive Officer, and Timothy Kraus, Senior Vice President and Chief Financial Officer. Bruce, call 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 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 substantially complete and will start to turn from headwinds that are in our numbers right now to tailwinds for us going forward.

Just before I get into my my slide here, just stepping back and talking about kind of the puts and takes in terms of the third quarter.

Speaker #4: Bruce calls yours . Well , thank you , Craig , and good morning , everyone , and thanks for joining Craig . Tim and I for a discussion here on Dana's Q3 earnings .

I guess, here's what I sort of see as the highlights first of all you'll see improving business performance and that's something that we expect to see accelerate as we get into our fourth quarter and the driver for that would really be.

Speaker #4: 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'd sort of see as the highlights.

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 are a tailwind for us going forward.

Speaker #4: 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 (Q4).

Speaker #4: And the driver for that would really be a few restructuring initiatives that have been completed are 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 that that drive improved financial performance on the tariff side.

Less of a headwind you'll see we had minimal impact here in Q3.

Speaker #4: 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 .

Bruce McDonald: 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, so those were headwinds against us.

Our full year.

Charge in terms of tariffs is lower than we thought a quarter ago, and then cost savings we were on track to deliver the $310 million, we talked about last quarter, but we are realizing those quicker and that's helping us.

Speaker #4: And that that drives improved financial performance on the tariff side , less of a headwind . You'll see we had minimal impact here in Q3 .

Speaker #4: Our full year charge in terms of tariffs is lower than we thought . A quarter ago . And then cost savings . We we're on track to deliver the 310 million .

With some of the.

Uplift to our outlook here.

In terms of negatives I I'd say, we have some volume softness, particularly in C V North America and to a lesser extent in Brazil. We did have jail are down for about five five weeks in the quarter. So.

Speaker #4: 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 .

So those were headwinds against US and then the last thing I'd point out is we do have there hasn't been some supplier or some easy program cancellations.

Speaker #4: In terms of negatives , I'd say we have some volume softness , particularly in CV North America and to a lesser extent , Brazil .

Speaker #4: We did have JLR down for about five five weeks in the quarter . So those were headwinds against us . And then 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 that that we expect will , will recover here in the fourth quarter .

And we have some charges in the quarter that we took associated that that we expect will it will recover here in the fourth quarter. So just turning to the highlights in terms of the off highway.

Bruce McDonald: 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. Just 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. I'd say the joint teams between ourselves and Allison are working hard to sort out all the plethora of work streams that we have in place to effect an orderly transition here in the quarter. In terms of our capital returns.

Rest assure that.

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 countries that we expect to wrap up here in the next week or so I'd say the joint teams between ourselves analysis and are working hard to sort of all of them.

Speaker #4: So just turning to the highlights in terms of the off highway divestiture that that remains on track . We do expect that to close here later in the fourth quarter .

Speaker #4: 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 .

A plethora of work streams that we have in place to affect an orderly transition here in the quarter.

Our capital returns.

Speaker #4: I'd say the joint teams between ourselves and Allison are working hard to sort out all the plethora of work streams that we have in place to effect an orderly transition here in the quarter in terms of our capital returns .

You'll see in a note we talked about buying between 100 $150 million of shares in the third quarter, we actually bought more than a $9 5 million or or 7% of our shares outstanding. We have had 10 b five plan in place throughout the quarter and as we sit here today we've bought.

Speaker #4: You'll see in our note , we talked about buying between 100 , 150 million of shares in the third quarter . We actually bought more than that 9.5 million or 7% of our shares outstanding .

Bruce McDonald: 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. 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 savings side, 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.

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.

Speaker #4: We have had a ten B5 plan in place throughout the quarter , and as of we sit here today , we've bought nearly 30 million shares or just over 20% of our shares outstanding .

As I said in my earlier remarks on cost savings side, a really good number here in the quarter were almost up to or our full year run rate of 73 million.

Speaker #4: 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, really good number here in the quarter.

We continue to look for other opportunities I, just I guess really pleased with the progress our team has made on on bringing these home tariffs the situation.

Speaker #4: We're almost up to our our full year run rate at 73 million . We we continue to look for other opportunities . I just I guess really pleased with the progress our team has made on on bringing these home tariffs .

It's getting a little bit better we continue to make progress getting U S MCA compliance, which which reduces the sort of headwind both from al on charge point of view, but also the margin deterioration that we see.

In our in our outlook or our recovery rate is now up in the upper 80%.

Bruce McDonald: 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 in our outlook. Our recovery rate is now up in the upper 80%. Lastly, in terms of the balance of the year outlook, I 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 vehicle is 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.

And then 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 vehicle looking good for the quarter.

Terms of commercial vehicle, we continue to see deterioration and in North America and to a lesser extent, Brazil. Nonetheless, the fact that we've got a better outlook in terms of tariffs a quicker realization of cost recovery. We are taking our full year guide up $15 million at the midpoint I would note that was.

In our guidance, we do have some <unk>.

<unk> ketchup factored in here J L R.

Got it in the lower commercial vehicle outlook here in North America in line with like estimates are out.

Out there and then we've factored in the latest Super duty schedule releases that we have as of this week.

Bruce McDonald: I would note that within our guidance we do have some volume catch up factored in here. We factored in the lower commercial vehicle outlook here in North America in line with estimates out there and then we've 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.

So 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 Prevention financial performance first a reminder, our results are presented excluding the off highway business, which is classified as discontinued operations sales for.

For the quarter were $1 $91 7 billion up $20 million compared to Q3 of last year.

Timothy Kraus: Thanks Bruce and good morning to everyone. Turning to Slide 6 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.

This reflects recoveries and 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 eight 5% driven by cost saving actions and operational efficiencies that helped mitigate the profit impact of lower sales and tariffs EBIT.

Proved 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.

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 an effect the effectiveness of our cost savings initiatives operational improvements and offsetting market headwinds. Please turn with me now to.

Timothy Kraus: 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 and operational improvements in offsetting market headwinds. Please turn with me now to Slide 7 for the drivers of the sales and profit change for the quarter. In line with the new reporting method, we have revised our walk presentation to include the impact of discontinued operations in the current and prior periods. The $579 million in sales and $121 million of profit removed from 2024 represents the off-highway business being sold and the accounting treatment for discontinued operations.

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 walk presentation to include the impact of discontinued operations in the current for the current and prior periods the $579 million in sales and $121 million of profit will move from 2024 represents the off highway business being sold and the accounting treatment for discontinued op.

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 and light vehicle production production disruptions at certain customers had minimal impact on light vehicle systems sales in the quarter.

Timothy Kraus: 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.

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 and 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, but recall, we are breaking out performance, which includes efficiency gains in manufacturing.

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 US dollar, yielded $21 million in higher sales compared to last year, moving to adjusted EBITDA.

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've taken across the company. This brings us to $183 million to date, and we are secure and our increased target of $235 million in savings for the full year 2025.

Timothy Kraus: 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 majority of this impact this year. Next I will turn to Slide 8 for details on our third quarter cash flow. As I discussed on Slide 6, the accounting for cash flow includes both continued and discontinued operations as shown here on Slide 9.

Volume and mixed lowered Ava by 35 million. This was a decent mental margin of about 50% higher than we typically expect reflecting significant mixed changes and continue to operational impacts within our thermal products business, including battery cooling. But recall, we are breaking out performance which includes efficiency gains in manufacturing.

Tariff impact in the quarter was minimal at just $1 million.

Performance increased profit by 11 million due to pricing and efficiency improvements across both segments.

Due to the catch up in tariff recoveries, we expect to see continuing profit headwind.

In the future, but we do expect recovery a majority of this impact this year.

Next I will turn to slide eight for details on our third quarter.

Cost savings added 73 million in profit, through the actions, we've taken 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.

Cash flow.

As I discussed discussed on slide six the.

The accounting for cash flow includes both continued and discontinued operations as shown here on slide nine for.

For the third quarter of 2025, we delivered adjusted free cash flow of $101 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 uh in the future but we do expect recovery of the majority of this impact this year. Next I will turn to slide 8 for details on our third quarter.

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 onetime costs, primarily related to our cost savings program were $17 million, which is $8 million higher than the prior period.

Cash flow.

As I discuss discussed on slide 6.

Timothy Kraus: For the third quarter of 2025 we delivered adjusted free cash flow of $101 million, which represents $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.

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 and crude improve.

The accounting cap for cash, flow includes both continued and discontinued operations as flown on here on slide 9. 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. 1-time costs, primarily related to our cost Savings Program, where 17 million dollars, which is 8 million dollars higher than the prior period.

Improved significantly by $76 million, reflecting better management 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.

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.

Overall these factors combined to combined to deliver a substantial improvement in free cash flow positioning us well to achieve our full year targets.

Please turn with me now to slide nine for an updated guidance continuing operations.

Timothy Kraus: Overall, these factors combined 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 9 for an updated guidance 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.

Yeah.

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.

Working capital and Crews improved significantly by 76 million reflecting better management 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 combined 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 9 for an updated guidance. Continuing operations.

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.

For all our targets, we have narrowed our ranges as we approach the end of the year, as we remain confident in achieving our targets.

Full year adjusted free cash flow is anticipated at $275 million at the midpoint of the tighter range for the year the profit improvement and continuing operations is expected to be.

We expect sales from continuing operations to be approximately, 7.4 billion dollars at the midpoint of the Titan range.

Adjusted IBA from continuing operations.

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.

Timothy Kraus: 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 walk we showed earlier, our full year guidance walk adjusts 2024 for estimated discontinued operations and walks 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.

Higher than previously anticipated, driven primarily by accelerated cost savings and performance improvements.

As with the quarterly walk we showed earlier our full year guidance walk adjust 2024 for estimated discontinued operations and walks forward our guidance for continuing operations beginning on the left discontinued operations reduced 2024 sales by $2 5 billion.

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 4-year guidance.

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 five 1% margin.

In this presentation, we have combined the impact of sales from continuing ops in our off highway business into the volume and mix category, we're 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.

Timothy Kraus: 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.

As with the quarterly walk, we showed earlier our full year. Guidance walk adjusts 2024 for estimated discontinued operations and walks 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 ibida from discontinued operations was 490 million. Reducing adjusted ibida to 395 million resulting in a 5.1% margin.

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.

In this presentation, we have combined the impact of sales from continuing opiates, in our off-highway business into the volume and mixed category. We are expecting volume and mix to lower sales by approximately 600 million dollars driven by lower demand in traditional commercial vehicle, markets, as well, as for electric light Vehicles impacting, our battery cooling business

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.

Adjusted EBITDA from volume and mix is expected to be lower by $130 million in performance. It is now expected to increase EBITDA by approximately $110 million, mostly through pricing improvements.

Foreign currency translation is now expected to increase sales by $25 million primarily.

Primarily driven by the strengthening euro compared to the U S. Dollar offsetting some of these sales impacts of lower volume.

Finally commodity cost recoveries should drive about $15 million and higher sales and now only about $5 million headwind to profit.

Timothy Kraus: 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 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.

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 Prophet headwind will be recovered next year.

The net result will be about 290 basis point margin improvement in continuing operations compared to last year as performance and cost saving actions overcome market headwinds.

Foreign currency translation is now expected to increase sales by 25 million primarily driven by the strengthening euro. Compared to the US dollar offsetting some of these sales impacts of lower volume.

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.

Finally, commodity cost recovery should drive about $15 million in higher sales and now represents only about a $5 million headwind to profit.

The net result will be about. 290 basis point margin Improvement in continuing operations compared to last year as performance and cost-saving actions, overcome Market headwinds

One time cost will be about $30 million higher as we invest in our cost saving programs and restructuring.

Next, I will turn this slide 11 for the details of our free cash flow. Guidance.

Working capital will be about $105 million lower as we continue to reduce the requirements to operate the business and capital spending that is expected to be about $325 million this year, which was $45 million lower than last year.

Timothy Kraus: 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.

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 ebit, though.

And finally, I will turn it back over to Bruce for some closing comments on slide 12, Okay. Thanks, Tim.

1 time, calls will be about $30 million higher. As we invest in our cost-saving programs and restructuring

So this slide is really the same as we 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 commitments. So it's cost savings for the year.

Working capital will be about $105 million lower as we continue to reduce the requirements to operate the business in capital spending. Net is expected to be about $325 million this year, which is $45 million lower than last year.

Bruce McDonald: Okay, thanks Tim. This slide's 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 so, 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% to 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.

So the run rate that we're targeting a 310 million, we're solidly on track and as we've discussed here earlier.

And finally, I will turn it back over to Bruce for for some closing comments on, slide 12.

Thanks Tim.

Um,

so, this slide's really the same

We're realizing more of that benefit here in 2020, sorry 2025.

kind of reflects the

In terms of our margin outlook, we've been consistent for a year now that we were going to have 10 to 10, 5% margins for 2020, and it's really nice to be giving guidance here for the fourth quarter, that's in top or in that range or even slightly on top of.

I think the business is performing well and we're delivering on our commitments, so it's cost savings for the year. Um, or or so the Run rate that we we're targeting the 310 million. We're solidly on track. And as we've discussed here earlier we're we're we're realizing more of that benefit here in 2026. Sorry 2025.

I'd say overall.

in terms of our margin Outlook, you know, we've been consistent

Our team is doing a great job over delivering on the things that we can control and thats, helping us offset the things that we cannot control in terms of our return of capital to shareholders. We are committed to the $600 million this year.

And then lastly, I would say in terms of our growth story I think it's underappreciated by the market we have had.

for a year now that we were going to have 10 to 10 and a half percent margins for 2026, and it's really nice to be giving guidance here for the fourth quarter that's in top or in that range or even slightly on top of um I'd say overall

Some deterioration in our backlog due to easy program cancellations.

Bruce McDonald: 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, our backlog due to easy 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 and A.

Deferrals or lower volumes, but nonetheless team's done a nice job this year, gaining share winning incremental programs and so we plan on having an analyst call here in January and going through on a revised backlog.

We continue to win new business.

Hopefully hope to add to our backlog between now and January with that we'll turn it over for Q&A.

Andrew 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.

Regina: 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.

January with that, we'll turn it over for Q&A.

Hi, yes.

Thanks for taking my 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.

And we will now begin the question and answer session to ask a question. Press star, then the number 1 on your telephone keypad, we kindly ask that. You, please limit yourself to 1 question at a time. Our first question comes from the line of Tom. N, Ryan with RBC Capital markets, please go ahead.

[Analyst]: 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. It had no positive impact from that. I'm just wondering if you're seeing a 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, European or maybe even the Japanese and the Koreans, and have a quick follow up.

Exemption or extensions that included.

Broadening the scope of parts.

And you saw that two large OE U S Oems huge impact on their tariff guidance, presumably there volume outlook.

Virtually earlier this morning, a large European OEM reported results. It had no positive impact from that so I was just wondering if you were seeing some dynamic here, where the U S. Oems, which you guys have more exposure to navy benefiting more from tariff policy changes.

Then, perhaps others European or maybe even the Japanese and the Korean.

Quick follow up yeah, Yeah, no I think Youre, obviously right.

I mean, the rebate is based on vehicles assembled in the U S and obviously.

The Detroit three make more in the U S. And then the Europeans are the other transplants and so I think to me the most important thing.

Bruce McDonald: Yeah, yeah, no, 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 think to me, the most important thing in the recent announcement in that regard is I think there's always been some concern around are customers going to have to pass along the higher prices that on the short term they're eating in their margins to the end customer. To the extent that were to happen, then 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.

Hi. Yeah. Uh, thanks for taking the question guys. Um, you know, my first 1. It it's kind of an oem question, but it relates to you guys too. Um, you know, the big story from this earnings season was, uh, the, the, the big policy change. You know, the MSRP, uh, exemption or, or extension that included, uh, broadening the scope of parts, and you saw that, you know, 2 large, OE us oems, huge impacts on their tariff guidance and presumably their volume Outlook conversely. You know, earlier this morning, a large European OEM reported results. It had no positive impact from that. So I'm just wondering, if you are seeing some, a dynamic here, where the US oems, which you guys have more exposure to maybe benefiting more, from tariff policy changes than perhaps others European or maybe even the Japanese and the Koreans. They have a, a quick follow-up. Yeah. Yeah.

In the recent announcement.

In that regard I think there's always been some concern around our customer's going to have to pass along the higher prices.

No, I think you're absolutely right. It, it it I mean, the the rebate is based on vehicles assembled in the US and obviously,

On the short term they are eating in their margins to the end customer and to the extent that were to happen. Then obviously vehicle demand is going to drop and so I think that risk has substantially diminished with with the new guidelines that have come out that's kind of the way I look at it.

The big the the Detroit 3, make more in the US than than the Europeans or the other transplants. And so I think to me the most important thing in in the recent announcement,

Yeah.

Okay.

And then 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 like how typically that cycle works and are you seeing any kind of light at the end of the tunnel.

Uh in that regard is is I think there's always been some concern around our our customers going to have to pass along the higher prices that on the short term, they're eating in their margins to the End customer and to the extent that were to happen. Um then obviously vehicle demand is going to drop and so I think that risk has substantially diminished with with the new guidelines that have come out. That's, that's kind of the way I look at it.

[Analyst]: Okay. My quick follow up, the commercial vehicle side, it sounds like from your prepared commentary that that situation is deteriorating. Just curious, you could give us a context of like how typically that cycle works. You know, are you seeing any kind of light at the end of the tunnel? Thanks.

No we're not seeing any light at the end of the tunnel I would say I mean.

If you look at kind of the run rate here and then I'll talk about North America, specifically in the in the third quarter.

We're running around 200000 unit annualized run rate.

Bruce McDonald: Nope, we're not seeing any light at the end of the tunnel, I would say. I mean, if you look at kind of the run rate here, I'll talk about North America specifically in the third quarter 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.

Okay. Um, and then 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.

I know from talking to our customers that.

The.

Backlogs that they all have really been.

<unk> down.

Nope, we're not seeing any light at the end of the tunnel. I would say, I mean, if you look at kind of the Run rate here and then I'll talk about North America specifically in in the in the third quarter.

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 so I think it's going to be a.

We're running around a 200,000 unit annualized, run rate. Um, I know from talking to our customers that the, um, you know, backlogs that they all have have really been.

Fairly.

Soft market here.

Certainly for as long as we can see into mid 2026.

At this point in time.

Don't see any green shoots that would suggest it's going to turnaround.

Run down. Um, I think there's a lot of uncertainty in the marketplace. Um, there's we would have expected maybe to start to see some signs of prey, uh, in in 2026 associated with some emissions, uh, legislation changes. And we're not seeing any of that. So I think it's going to be a

Got it thanks.

Fairly um, soft Market here.

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.

Okay.

This is certainly, you know, for as long as we can see into mid-2026, and at this point in time, I don't see any green shoots that would suggest it's going to turn around.

Our next question comes from the line of Emmanuel Rosner with Wolfe Research. Please go ahead.

[Analyst]: Got it.

Got it.

Bruce McDonald: 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.

Alright. Thank you so much good morning.

My first question is on the implied.

Outlook for the fourth quarter, which as you pointed as.

[Analyst]: Okay.

I 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.

Is pretty strong and with margins already.

Regina: Our next question comes from the line of Emmanuel Rosner with Wolfe Research. Please go ahead.

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.

Emmanuel Rosner: 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 basically 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 some of the forward schedules and the impact potentially from the fire. Just curious how to think about the performance quarter over quarter into the fourth.

Our next question comes from the line of Emmanuel. Rosner. With wolf research. Please go ahead.

Sequential drivers so it's like it will 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 <unk>.

Oh, thank you so much, good morning. Um, uh, my first question is on the implied, um, outlook for the fourth quarter, which as you pointed is,

The some of the forward schedules and the impact potentially from the fire. So just curious how to think about the performance quarter over quarter into the fourth.

Maybe it was Tim So a couple of things obviously, we've got we've got continued improvement coming through from R. R.

Our cost savings initiative, we do see mix improving.

In the quarter and then I think the other the other big driver and Bruce mentioned.

Timothy Kraus: Yeah, this is Tim. A couple things. Obviously we've got continued improvement coming through from our cost savings initiative. We do see mix improving in the quarter. I think the other big driver, and Bruce mentioned this in his opening comment, we are at the tail end of some restructuring actions that we believe 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.

Is pretty strong. And and with margins already, you know, basically above uh, slightly above the high end of your margin outlook for next year. Just curious if you can help us out in terms of uh, sequential drivers. Uh, so it's 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 uh, you know, the, you know, some of the Ford schedules and the impact potentially from the fire. So just curious how to think about the performance quarter over quarter into the fourth.

And this in a couple of in his opening comments, we are at the tail end of some some restructuring actions that we believe are.

Which have some headwinds certainly through the.

Through the third quarter that we think will also drive additional performance and better profitability into the fourth quarter and that that provides us a great springboard into into 2026 as we get some of these actions behind us and we did we did.

Our, uh, our cost savings initiative. Um, we do see mix improving, uh, in the quarter. And then I think the other, the other Big Driver and, uh, Bruce mentioned this, um,

Announced the closure of <unk>.

Battery cooling plant.

Earlier in the quarter so.

This is part of what we're seeing and we're continuing to work to improve the cost base.

The business across the board so you'll see those come through in the fourth quarter as well as next year.

Okay. That's helpful and then just honing in on the <unk>.

Top line.

Dynamic so.

Could you give us a little bit more color around.

Let's make sure you're referring to in terms of improving in the fourth quarter and also maybe sort of any color around.

Emmanuel Rosner: That's helpful. Just honing in on the top line and mix dynamics, could you give us a little bit more color around what mix you're referring to in terms of improving in the fourth quarter, and also maybe sort of like 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 loss. Just curious what's embedded in the schedules that you have received?

In a couple of in his opening comment, we are, you know, at the tail end of some, some restructuring, uh, actions that we believe you are, well, which have some headwinds certainly through the, um, through the third quarter that we think will also Drive additional performance and and and better profitability into the fourth quarter and and and that that provides us a great springboard into into 2026. As we get some of these actions behind us. And you know we we did we did uh announced the the closure of uh of a battery cooling plant um you know earlier in the quarter. So um you know that this is part of of what we're seeing and we're continuing to work to improve the cost base of the business across the board. So that you'll see in those come through in the fourth quarter, as well as next year.

What's assumed for some of these potential indirect impact on your customers from the <unk>.

And that's helpful. And then just honing in on the... uh,

Some of the Nobel fire crews.

Is one view around forward schedule, and then forwards, obviously give <unk> guidance, which had a fairly massive amounts of volume production.

So just curious what's embedded in your schedules that you have received.

Top Line and and the M mixed Dynamics. So um, can you give us a little bit more color around? You know what makes you referring to in terms of uh improving in in the fourth quarter and also maybe sort of like any color around? Um, what's assumed for some of these potential, you know, indirect impact on on your customers from the, uh,

So obviously you don't want to get.

Head of our customer but.

We're fairly in line with with what our customer has said publicly around around those and how they ultimately run we'll see but but certainly from our perspective were fairly in line with where we see fords for its public statements in terms of mix. Some of this is really the <unk>.

Timothy Kraus: 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 and 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.

Mix of products as we're moving from plant to plant. So that's.

We do have a bit better mix on some of the products, where we have better contribution margin quarter to quarter, but a lot of it is is really getting some of the restructuring and the movement of some of the product.

Around in the plants as we as we rationalize our production footprint, yes, maybe just one other comment on that one kind of going the other way is if you look at R. R.

Our third quarter, we were we are pretty constraint in terms of magnets.

From the novellas fire because, um, you know, IHS as, as 1 view around, you know, fourth schedule and then Ford obviously get give their own guidance, which had a fairly, you know, massive amount of, uh, volume production of lost. So, just curious, what's, what's embedded in, uh, in in your, the schedules that you have received? Yeah, so, uh, you know, obviously don't want to get, you know, ahead of our customer. But but, you know, we're, we're fairly in line with with, with what our customer has said publicly around, uh, around those and how how they ultimately run, you know, we'll, we'll we'll see, but, uh, but certainly from our perspective you know, we're we're fairly in line with where we see Fords. Um, Ford's public statements in terms of mix. Some of this is really the mix of of products as we're moving from plant to plant. So that that's, um, you know, we do have a a bit better mix on on some of the products where we have better contribution margin, um, quarter to quarter. But a lot of it is, is really

We are.

<unk> is in China.

India.

Bruce McDonald: 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.

In Europe, where we had difficulties getting magnets and that log jam <unk> Phil.

Really getting some of the restructuring in the movement of some of, uh, the product, uh, around in the plants as we, uh, as we rationalize our, our production footprint. Yeah. Maybe, just 1 other comment on that. 1 kind of go on the other way is, is if you look at our

Frei here. So we do have we do expect to have some substantial catch up in terms of frustrated orders, which are for us very high margin correct.

Great.

Yes.

Thank you.

Our next question will come from the line of Edison <unk> with Deutsche Bank. Please go ahead.

Hi.

When you're on tour.

Timothy Kraus: Yeah, correct.

Taking the call.

My first question is on the 110 performance I think in the prepared remarks, you mentioned that it's mostly driven by pricing improvements.

Our third quarter, we were, we were pretty constrained in terms of magnets. Um, you know, we, we have, we have facilities in China India, um, and, and, uh, Europe where where we had difficulties getting magnets. And that Log Jam knock wood. Seems to have broken free here. So we we do have, we do expect to have some substantial catch up in terms of frustrated orders which are for us. Very high margin. Yeah. Correct.

Emmanuel Rosner: Great. Thank you.

Bruce McDonald: Thank you.

Regina: Our next question will come from the line of Edison Yu with Deutsche Bank. Please go ahead.

Great. Thank you. Thank you.

I'm just curious is there sort of a program going on.

[Analyst]: Hi, this is Win Yong for Edison. Thanks for taking the call. My first question is on the 110 performance. I think your prepared remark, you mentioned that it's mostly driven by pricing improvements. I'm just curious, is there sort of like these bigger programs that are all growing on at better pricing, and then what are some of the other drivers that might be embedded in this number? Thank you.

Our next question will come from the line of Edison you with Deutsche Bank. Please go ahead.

And then what are some of the other drivers.

Okay.

Yes. So some of it is as we move through and bring new platforms and new new programs on place that comes with with revised pricing. So thats running through there and then.

Teams the commercial teams have done a really nice job.

Timothy Kraus: Yeah, some of it is as we move through and bring new platforms and new programs in place, that comes with revised pricing. 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 improvement. 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.

Hi. Uh, this is Winnie on for Brad, thanks for taking a call. Um, my first question is on the, the 110 performance, I think you're preparing. Remark you mentioned that it's mostly driven by pricing improvements. Um, I'm just curious, is there sort of like these bigger programs that all going on at a better pricing? And then what are some of the other drivers that might be embedded in this number. Thank you.

With the customers to go get recoveries, both from an economic and and before.

For improvements so a lot of that is real pure pricing that we see and you see that falling through the number in front of me, but I think there's about $80 million of topline that's flowing through and Thats, what youre seeing in that $110 million the balance of that is really productivity in and.

Yeah, so so some of it is is as we we, we move through and and bring uh, new platforms and new, uh, new programs on place. So that comes with, uh, with revised pricing. So that's running through there. And then, you know, we the teams the commercial teams have done a really nice job uh, with the customers to go get recoveries uh, both from an economic and and for uh um

Performance improvement at the plant level net of all of the.

Inflationary impacts that flow through the business.

Got it that's very helpful and then maybe on both lines.

We are going to make sure you can maybe just provide some higher level.

Preliminary quickly.

Sure.

Okay.

For improvements. So a lot of that is is real. Pure pricing that we we see and you see that falling through. I I don't have the number in front of me but I think there's about 80 million dollars of Top Line That's flowing through and that's what you're seeing in that 110 million. The balance of that is is is really um, productivity and and um uh performance Improvement at the plant level net of all of the uh, inflationary impacts that that flow through the business.

[Analyst]: 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.

Yes, So I think 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.

Got it. That's very helpful and then maybe on both um live vehicle and Commercial you can maybe just provide some higher level you know, preliminary puts and take that you're seeing or considering into 2026.

Timothy Kraus: 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. 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.

That should be should help help volume but.

Our core light vehicle program, especially on the driveline side right Super duty Bronco Wrangler range are those are all still very strong runners and we would continue to see those well into next year to continue to to.

To drive the volume side of this and wrangler is going to come out and have some refreshing so that should help as well, yes, maybe just a couple of others.

Color commentary on that.

Obviously with oil prices being quite soft.

A nice tailwind in terms of large SUV.

Some of the some of the short term deterioration that we're seeing in the Super duty for Ray talked about uplifting their volume next year in the Middle I think its August of next year, they'll introducing incremental super duty production at our <unk> facility. So I would say the tail winds in terms of ice.

Bruce McDonald: 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.

Um, yeah, I so I think, you know, Bruce mentioned, you know, 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, um, that there'd be a whole lot of improvement as as we look through. Uh, on the light vehicle side, we have a a number of programs that are launching, uh, next year, uh, that that should be, uh, should help help volume. But you know, our, our core light vehicle program, especially on the drive lines side. Right. You know, Superduty Bronco Wrangler Ranger. Those are all still very strong Runners and we we would continue to to to see those uh well into next year to continue to to uh, to drive uh the the volume side of this and and and Wrangler is going to come out and and, and have some refreshments so that should help as well.

Yeah, and maybe just a couple of...

Large SUV.

Our product exposure.

Bodes well for us as we as we drift into 2026 years.

Got it and I'm, just a little surprised to see the Hudson dynamic right before that.

We're just not seeing a lot of.

<unk> heard from.

Logic customers.

color commentary on that I mean obviously with with oil prices being quite soft that that's a that's a nice Tailwind in terms of large SUV. Uh um some of the some of the short-term deterioration that we're seeing in Superduty. Ford's already talked about uplifting their volume next year in, in the middle. I I think it's August of next year. They'll introduce an incremental Superduty production at their Oakfield facility. So I would say the Tailwind in terms of ice large SUV, um, are product exposure, um, boats,

The original guidance.

For us as we drift into 2026 here.

[Analyst]: I'm just a little, you know, surprised to the question. Daniel might be in line 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 baking 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?

Conservatives and therefore.

Even though youre taking from the impact.

We're still retaining along with it.

Or are they not really.

Very good.

Yes, it's a minimal right.

It's a bit of both so we had some of this in.

Got it. I'm just a little, you know, surprised to to the question that I know might be in line before that. Um, you're just not seeing a lot of, you know, impact in Q4 herself. From from 1 of your, you know, larger customers. Is it? Just because, like, the original guidance was,

And in our forecast that we had.

Back in August so.

And then some of it.

The view from the customers are going to make up some of this as we move through the back the back part of the quarter and I mean keep in mind, where our exposure is super duty F 150, so when they when that one year here in the volumes.

Timothy Kraus: Yeah, it's a bit of both, right, Winnie? 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, the back part of.

Conservative and therefore, you know, even if you're taking in some of the impact, um, you're still retaining a lot of it or, or they are they not really flowing through the that impact to, to, to you guys.

Youre hearing kind of both and.

I think just given the profitability of the Super duty.

Bruce McDonald: The quarter, and 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.

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 <unk> with BNP Paribas. Please go ahead.

Hey, good morning, everyone.

Just as we think about next year.

[Analyst]: Got it. Okay, that's very helpful, thank you.

Yeah, it's a bit of mold. Write Winnie there's it's a bit of both. So we we had some of this in in the in our forecast uh that we we had you know you know back in August. So uh and then you know some of its you know the the view from the customers are going to make up some of this. You know, as we move through the back, the back part of the core and and and I I mean keep in mind we're our exposure is Superduty, not F150. So when they when they when you're here in the volumes um you're here in kind of both and um I think just given the profitability of the Superduty they're they're they're kind of over rotating to try and keep that running as strong as they can.

But are we at a point.

Got it. Okay, that's very helpful. Thank you.

At all to quantify the next slate of cost savings beyond the $310 million program with respect to <unk>.

Regina: 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 porello with BNP pariba. Please go ahead.

[Analyst]: 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, and just overall, I guess, stronger execution.

Closures that you you touched on in your prepared remarks.

And just overall.

Hey uh good morning everyone. Um just as we think about next year.

Yes.

Stronger execution.

Yeah. Thanks for that question, it's a good one but yes, I would say in terms of the.

Opportunity, we have to expand our margins.

We still have a long way to go.

If you think about the $310 million.

Are we at a point uh at all to quantify the the next slate of cost savings, you know, beyond the 310 million program, you know, with respect to plant closures which you you touched on in in your prepared remarks. Uh and just overall you know, I guess.

Bruce McDonald: Yeah, thanks for that question, that's a good one. I would say in terms of the opportunity 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 cost 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. We announced one earlier this month.

Stronger execution.

Heavily focused on the things that we could implement quickly without investment and so if I just look at that bucket of cost through.

Yeah, thanks for that question. It's a good 1. Um, but yeah, I would say in in terms of the, um,

Standardization from systems work.

I would still say, we probably have another $50 million to $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 plans for sure. We've got we've got some footprint.

Opportunity that we have to expand our margins that we still have a long way to go. Um, you know, if you think about the 310 million it it's heavily focused on things that we could Implement quickly without investment. And so if I just look at that bucket of cost through

Opportunities in and we announced we announced one earlier.

This month.

I would say just given the amount of investment that we've had to make in.

In electric vehicle over the last few years.

We've made those investments you could think about it at the expense of our core operations and so if you looked at the level of automation that we have in our plants. It is well below.

Standardization and some systems work. You know, we, we would still say we probably have another 5075 million that we can get over the next few years. Um, 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 we've got some footprint, um, opportunities and and, you know, we announced

Bruce McDonald: I would say just given the amount of investment that we've had to make in 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 six to twelve months.

We announced 1 earlier, um, this month.

What you would see at other well capitalized suppliers.

I think we've got other opportunities in terms of product line rationalization that we still have a lot of products, where we make inadequate or negative returns and we're working our way through that and then I would say lastly would be on the <unk> side, we do expect to continue.

Continue to refine our cost base, there and get that business from being a drag on our margins to be in accretive and I expect that to sort of flip around here in the next six to 12 months. So there's still a lot an awful lot of levers that we can Paul I don't see 10 or 10 five.

As being our high watermark I believe we've got.

Opportunity to continue to grow at fairly significantly over the next couple of years.

Bruce McDonald: There's still a lot, 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.

We make inadequate or negative returns and and we're working our way through that and then I would say lastly would be on the EV side, you know, we we do expect to um continue to refine our our cost base there and and get that business from being a drag on our margins, to being a creative. And and and I expect that to sort of flip around here in the next.

Got it that's really helpful.

My follow on maybe on the topic.

Automation, how are you thinking about the right run rate for Capex as a percentage of sales next year and then.

6 to 12 months so that there's still a lot an awful lot of levers that we can pull. I I don't see 10 or 10 and a half as being our high water, mark. I I believe we've got, um,

Can you just remind us what's assumed or expected for the stranded cost capture.

Opportunities to continue to grow it fairly significantly over the next couple of years.

[Analyst]: Got it, 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 capture for next year as well? Thank you.

Got it. So that that's really helpful and

But for next year as well thank you.

Yes, Jamie so about sort of think of Capex and about 4% of sales range.

So.

That's probably where we'll end up plus or minus in terms of the stranded cost.

My follow-on may be on the topic of plant automation, like how are you thinking about the right run rate for CapEx as a percentage of sales next year? And then, um, to just remind us, what's assumed or expected for the stranded costs?

To capture.

It's probably $30 million to $40 million we.

Timothy Kraus: Yeah James, 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 to $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 to $40 million, and we believe we'll be able to take all those out really as we get through and we exit 2026.

For for next year as well. Thank you.

We do expect to be able to start taking.

A good chunk of those cost out is.

Yeah, James. Hey, so, um, about you can sort of think of capex in about the 4% of sales range. Uh,

Once we close the we closed the transaction and move into it into 2026 now some of those costs will remain because we will have will have some some transitional services that all needs to be provided but but they'll be offset with.

With payments from from Allison for that but again $30 million to $40 million and we believe we'll be able to take all those out really 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.

<unk> next year.

And I don't want anybody may Miss Smith led here like we're not talking about humanoid robots and stuff like that we're talking about basic automation unloading and loading machines.

Bruce McDonald: 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, and I view that as a huge opportunity for us.

<unk> moving at Taylor and her factories, we're way behind.

Automotive standard.

I view that as a huge opportunity for us.

So, uh, that's that's probably where we'll, we'll we'll end up plus or minus, uh, in terms of stranded cost. Uh, you know, it's it's probably 30 to 40 million. Um, we do expect to be able to start taking, um, a good chunk of those costs out as, uh, you know, once we close the, uh, we close the transaction and and move into into 2026. Now, some of those costs will remain because we'll have, um, we'll have some some transitional services that I'll need to be provided, but but they'll be offset with, um, with payments from, uh, from Allison for that. But again, 30 to 40 million and and we believe we'll be able to take all those out, you know, really. As we we, we get through and we exit 2026, you'll, 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, um, expenditure next year, um, you know, and, and I, I don't want anybody to be Miss misled here. Like we're not talking about humanoid robots and stuff like that. Where

Our next question will come from the line of Joe Spak with UBS. Please go ahead.

Thank you.

We're talking about the basic automation, unloading and loading machines. Um, agvs moving the tiller on our factories. We're we're way behind

Guys I just wanted to maybe follow up on that on that last point so.

The automotive standard and and and I do that as a huge opportunity for us.

It sounds like Theres, a big bucket of opportunity here, but it will require some investments I just want to be clear should should we expect some of that investment to start next year and then maybe savings.

Regina: Our next question will come from the line of Joseph Spak with UBS. Please go ahead.

Our next question will come from the line of Joe's back with UBS. Please go ahead.

[Analyst]: 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 investments. I just want to be clear. Should we expect some of that investment to start next year, and then maybe, you know, savings, and just say how quickly can savings come in after that investment?

Thank you. Um,

And you see how quickly can savings come in after that after that investment.

Yes, yes.

Yes, yes, we will I mean, if you think about it we've been spending.

Pretty significantly on an EEV over the last few years.

<unk>.

The easy way to think about this is we plan to take some of that some of those dollars and redeploy them as Bruce mentioned, we were investing in <unk> to some extent at the expense of some of the stuff in our normal old old School.

Timothy Kraus: Yeah, go ahead. 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, and we'll spend that capital to find areas, and 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. This will be a bit more deliberate and accelerated as we go through and those dollars are freed up.

Guys I just wanted to maybe follow up on that on that last point. So uh it sounds like there's there's a big bucket of opportunity here but it will re require some Investments. I just want to be clear. Should should we expect some of that investment to start next year and then maybe you know savings uh and and do you see how quickly can savings come in after that? After that investment?

Ice plants, and we'll spend that capital.

Find areas and by the way, it's a target rich environment in terms of being able to improve the efficiency on the plant floor. I mean, if 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 were.

We come through the transaction will will free up a lot of cash flow apo.

Operating cash flow from from lower interest expense and lower taxes, and we intend to to make sure that we're investing in the right places at the right returns for the business to drive shareholder value.

No. Yeah. Go ahead. Yeah. Yeah we we will. I mean, if you think about it we've been spending, you know, pretty significantly on on EV over the last few years. You know? We we we'll the the the easy way to think about this is we plan to take, you know some of that some of those dollars and and redeploy them. Um, as Bruce mentioned you know, we were investing in Eevee to to some extent that the expense of some of the stuff in our normal old old school, you know, ice plants and we'll we'll we'll spend that Capital to to to find areas. And and by the way, it's a target-rich environment in terms of being able to to improve the efficiency uh, on the plant floor. I mean, it it we do this every day. But but this will be, you know, a bit more uh, deliberate and and exciting.

Timothy Kraus: 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.

That level of Capex are still maintaining our 4% free cash flow guide.

Alright.

But some of it is some of it is redeployment and some of it's incremental.

Yeah, Yeah, correct. That's correct I mean, we are 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 were delivering from increased profitability back into the business that can get to.

Bruce McDonald: Yeah, with that level of CapEx, we're still maintaining our 4% free cash flow gain.

Accelerated as we we go through in those dollars are freed up, don't forget that. As we we come through the transaction, you know, we'll, we'll we'll free up a lot of cash flow around, you know, operating cash flow from from lower interest expense and, and lower taxes. And we we intend to to make sure that we're investing in the right places at the right returns for the business to drive shareholder value.

yeah, with with

Dan Levy: Right.

[Analyst]: Some of it is redeployment and some of it's incremental is the right way to.

maintaining our 4%, free cash flow guide.

Timothy Kraus: Yeah, correct. That's correct. I mean we're below that obviously today, but our view is that will 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.

To kind of generate the snowball effect and continue to drive those margins higher over the next two three years. Yes. This is fairly short payback stuff yeah.

I guess the second question I just want to.

I want to make sure I heard correctly, Bruce I think in your opening comments you talked about some <unk>.

<unk> charges in the quarter I think that related to sort of I don't know if that was sort of some of the plants actions. You took but then you sort of alluded to a recovery maybe from lower.

Bruce McDonald: Yeah, this is fairly short payback stuff.

Timothy Kraus: Yeah.

Short, payback stuff. Yeah.

[Analyst]: I guess this 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, I don't know if that was 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, are those charges in the third quarter results, and then is the recovery in the guidance, and how much are we talking about here?

Volumes in the fourth quarter.

I guess, a where those are those charges in the third quarter results and then there's the recovery in the guidance and how much how much are we talking about here. Yes. So we did we did we did take I mean, let's say charges. We did have to book some some additional costs related to some of the EV programs that were <unk>.

Um I guess the second question. I just want to um I want to make sure I heard correctly Bruce, I think in in your in your opening comments, you talked about some

During the quarter.

It's a number of different Oems.

Timothy Kraus: Yeah, we did take, I mean, 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, plus or minus. It's not a massive number. Again, we are in active discussions with the customer over recovery of these amounts and we expect to get those in the fourth quarter.

The total number is.

You can call it 10 ish million, maybe plus or minus it's not a massive number but again. We are we are in active discussions with the customer over recovery of these amounts.

And we expect to get those in the fourth quarter, yes. They just didn't match just didn't match up the accounting rules are a little different between.

What we got a book in terms of cost and what we have to book in terms of the recoveries and since they are non contractual on the recovery, okay, but I don't want to get in that specific programs or customers. Because obviously, we're actively engaged with.

EV charges in in the quarter. I think that related to sort of. Uh, I don't know if that was sort of some of the plant actions you took, but then you sort of alluded to a recovery, maybe from lower EV volumes in the fourth quarter. Um, I guess a was were those are those charges in the third quarter results and then is the recovery in the guidance and how much, how much are we talking about here? Yeah, so, so we, we did, we did we did take, I mean, let's say charges. We, we did have to book some, um, some additional costs related to, to some of the EV programs that were canceled during the quarter. Um, it's it's a, a a number of different oems. The the the total number is, you know, you know, you can call it 10-ish million, maybe, you know, plus or minus. It's not a massive number. But again, we we are, we are inactive discussions with the customer over uh, recovery of these amounts. Uh,

Bruce McDonald: Yeah, they just didn't match.

Timothy Kraus: 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 their 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.

With those discussions with the customer today.

No that's totally fine.

$810 million in Q3 that we anticipate recovering in Q4 correct.

Okay, well I guess, what I wanted to make sure was that that was actually in the results are not aeronautics.

Uh, and we expect to get those in in the fourth quarter. Yeah, they just didn't match it. It just didn't match up. The the accounting rules are a little different, you know, between, you know what, we got a book in terms of cost and and what we we we have to book in terms of the recoveries and since they're non-contractual on the recovery side, okay? But but I I don't want to get in that specifics of of programs or, or customers because I I

Included in the adjusted EBITDA number Joe.

[Analyst]: No, that's totally fine.

We're, we're actively engaged uh with those discussions with the with the customer today.

Bruce McDonald: $8 million or $10 million in Q3 that we anticipate recovering.

Okay. Thank you okay. Thanks, a lot guys.

No, that that's totally fine.

No problem.

Timothy Kraus: Q4. Correct.

Our next question will come from the line of Ryan Brinkman with Jpmorgan. Please go ahead.

[Analyst]: Okay, I guess what I wanted to make sure was that that was actually in the results.

8, 8 or 10 million in Q3 that we anticipate recovering in Q4, correct?

Hi, Thanks for taking my question and I know, we just had the discussion about what's next in terms of the additional opportunity to improve margin and cash flow beyond <unk> 10.

Timothy Kraus: You're not excluding it, it's included in the adjusted EBITDA number. Joe.

Okay. I I guess what I wanted to make sure was that, that was actually in the results. You're not, you're not expecting. It's included in.

Bruce McDonald: Yeah.

[Analyst]: Okay, thank you. Okay, thanks a lot, guys.

The adjusted EBITDA number, Joe. Yeah.

Bruce McDonald: Yep, no problem.

Regina: Our next question will come from the line of Ryan Brinkman with J.P. Morgan. Please go ahead.

10, 5% and 4% of sales that you can target respectively continued to target for 2026.

Thanks a lot, guys. Yep, no problem.

Ryan Brinkman: 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% to 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 plan to ask that question myself if you really are at 10% to 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 at like 9.4% for next year for EBITDA margin. Maybe just review a little bit to your confidence in next year in the lack of incremental execution. I think that's maybe needed to get there in on the free cash flow.

That's a pretty much a discussion that I plan to ask that question myself. If you really are at 10 dependent 5% exit run rate at the end of the fourth quarter, but maybe just taking a step back and it's worth pointing out I think consensus is that like nine 4% for next year for EBITDA margins. So maybe just review a little bit to your confidence in next year.

Our next question will come from the line of Ryan Brinkman with J.P. Morgan. Please go ahead.

And the capital landed incremental execution, I think thats may be needed to get there in on the free cash flow number two are there additional levers that you need to pull or you feel like you are pretty much going to be on track for that so long as the.

The end markets are there by the end of this quarter.

So if you just just so I'm.

Making your assumption on end markets is the premise.

Ryan Brinkman: Number two, 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 the end markets are there by the end of this quarter.

Bruce and I and the entire team are supremely confident in our ability to deliver what we've said for next year in the fourth quarter. We think is a good indication of that do.

Timothy Kraus: If you just make your assumption on end markets as the premise, Bruce and I and the entire team are supremely confident in our ability to deliver. What we've said for next year in the fourth quarter, we think is a good indicator 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.

Hi. Thanks for taking my question and I know we just had the discussion about what's next in terms of the additional opportunities to improve margin, and cash flow Beyond, even the 10 to 10 and a half percent and 4% of sales that you target respectively. Uh, you continue to Target for 2026. I don't think that's a premature discussion to have I plan to ask that question, myself, if you really are at 10 to 10 and a half percent exit, run rate at the end of the fourth quarter, but maybe just taking a step back. I mean, it's worth pointing out. I think consensus is that like 9.4% uh, for next year for for ebit margin. So maybe just review a little bit too your confidence in in next year and and the the lack of incremental execution. I think that that's maybe needed to get there in on the free cash. Flow number to are there like 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.

Do I think there are opportunities above that absolutely I do we do a lot of things can can go right and a lot of things can go wrong over the course of a year, but yes. We think there are additional opportunities both in terms of margin and cash flow even in 2026.

So if you just just so make making your your assumption on end markets as as the, as the, the premise, uh, you know, Bruce and I and the entire team are supremely confident in our ability to deliver what we've said for next year. And and the fourth quarter, we think is a good indication of that. Um, do I think there's opportunities above that?

Right now we're focused on on on closing out 2025, delivering the $310 million and really setting the company and the.

And the team up for delivering on next year. So like when you say the consensus is below that Bruce and I share a bit of frustration I mean, we've been saying this year for the better part of the year end.

We're really we're thinking that the.

Absolutely. I do. We, we, we, we, you know, there's a lot of things can can go, right? And a lot of things, can go wrong over the course of of a year, but yes, we we think there are additional opportunities both in terms of margin and cash flow, even in 2026. Um, right now we're focused on on on, on closing out, 2025, delivering the 310 million, and really setting, uh, the, the company and the and the

We're going to deliver in fourth quarter will help cement the fact that we.

We're going to deliver that 10 to 10, 5% next year.

Timothy Kraus: 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 fourth quarter will help cement the fact that we're going to deliver that 10% to 10.5% next year with potentially some upside.

With potentially some upside yes.

I'd say, Brian in terms of.

Here's how I look at it.

A year ago, we said, we're going to be 10 to 10, 5% and our consensus has slowly moved up.

The reason why we bought back our stock so aggressively is because we're highly confident in our number and if you use our number our stock price is significantly undervalued and so it's almost like we're buying two and getting one for Ian so on sale.

Bruce McDonald: Yeah, I'd say, Ryan, in terms of here's how I look at it. A year ago we said we're going to be 10% to 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.

And the team up for delivering uh, on next year. So, like when you say the consensus is below that, you know, Bruce and I, you know, share a bit of frustration. I mean, we've been saying this here for, you know, the better part of the year. And uh, you know, we we're we're really, we're thinking that the what we're we're going to deliver in fourth quarter will help cement. The fact that, you know, we're we're going to deliver that that 10 to 10 and a half percent next year. Um, you know, with potentially some upside. Yeah, I mean, I, I say, I'd say Ryan in terms of, um,

Stockholders now right.

And congrats on the execution, so far maybe just to finish on the end market point.

Doug 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, and I, just wonder if you're situated a little bit differently relative to some of the competition I don't know if its a class five through seven relative to eight or.

Timothy Kraus: It's on sale. Stock's on sale right now.

You know, here's how I look at it. We a year ago, we said we were going to be 10 to 10 and a half percent and our consensus has slowly moved up. Um, the reason why we've bought back our stock so aggressively is because we're highly confident in our number. And if you use our number our, our stock price is significantly undervalued. And so it's almost like we're buying 2 and getting 1 for you. It's on sale.

Ryan Brinkman: Congrats 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're situated a little bit differently relative to some of the competition. I don't know if it's a class five through seven relative to eight. I'm not sure, but you are seeing the softening now. Others are saying the floor has fallen out on the new vehicle builds in North America. Just curious if maybe you've got a little bit different exposure, a little bit more of the aftermarket. I'm not sure.

Stocks on sale right now.

I'm not sure.

But you are seeing the softening now the others are saying the Florence fallen out of the new vehicle builds in North America. Just curious if maybe you've got a little bit different exposure, a little bit more of the aftermarket I'm not sure.

So obviously, we have we are exploring aftermarket, but I would assume most of the other players do as well look vehicle fleets are aging theres still up there. We do think that the run rate. We're at now is.

So pretty low.

Timothy Kraus: Yeah. Obviously, we have exposure to aftermarket, but I would assume most of the other players do as well. Look, vehicle fleets are aging like they're still up there. We do think that the run rate we're at now is still pretty low now. 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, you know, three or three months ago. That's part of the reason why we're not probably as calling it out as much now. We're holding to the $7.4 billion. I think as we move into next year, the first half's not going to be, you know, we're not going to see gains, but we don't see it going a whole lot lower than we are now.

Now we had some of this built in so while others are calling it I mean, we were building a bit more conservative as them into the the CV leesville build when we came out.

Don't you have been um well, 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. And I just wonder if, you know, your situated a little bit differently, relative to some of the competition. I don't know if it's a class 5 through 7 relative to 8 or um uh I'm not sure um uh but you are seeing the softening now. Others are saying the floor is falling out you know, on the new vehicle builds um in North America. So just just curious. If if maybe you've got a little bit different exposure, a little bit more of the aftermarket, I'm not sure.

Yeah. So, you know

Three months ago.

So that's.

Part of the reason why we're not probably as.

Calling it out as much now and we're holding to the $7 4 billion, but I think as we move into next year.

The first has not not going to be we're not going to see gains, but you know what.

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 fleet will have to do some some work to replace it.

Yes.

Maybe just adding to that one on the CV side, our business is to gain share. If you look at kind of our share of wallet.

Timothy Kraus: 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.

Our customers, where we've done a lot of it the team hire when I got here have done a lot of good work on re footprint in that business and I think we have a cost advantaged.

The market, but I would assume most of the other players do as well. Look vehicle fleets are are, are aging like they're still up there? Um, we do think that the Run rate we're at now, is, you know, is still pretty low. Um, now we had some of this built in so While others are are calling it. I mean, we, we were building a, a, a bit more, um, conservative is is um, into the the CV vehicle build. When we we came out, you know, 3 or 3 months ago. Uh, so that's Pro part of the reason why we're not, uh, probably as uh, you know, calling it out as much now and we're holding to the 7.4 billion, but like I, I think as we move into next year, you know, the first half, not not going to be, you know, we're not going to see gains, but uh, you know we we don't see it going, a whole lot lower than we are now. I just don't think, you know, even with the

Bruce McDonald: Yeah, maybe just adding to that one. On the CV side, our business has gained share. If you look at kind of our share of wallet, our customers, where we've done a lot, the team prior when I got here had done a lot of good work on refoot that business, and I think we have a cost-advantaged model right now, and we are picking up share at our, at the big three customers that we have exposure to here in North America, which is helping to offset some of the market deterioration.

The backdrop that, uh, you know, the age of the fleet, you know, they'll have to do some work to replace it.

Model right now and we are picking up share at our at the big three customers that we have exposure to here in North America, which is helping to offset some of the some of the market deterioration yes.

Yeah, I would, I would maybe just add to that, on the CV side. Our business is...

here, if you look at kind of our share wallet,

It'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.

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

Hi, Josh on for Doug Thanks for taking my question.

My first one I just kind of wonder how we should bridge the <unk> margins into 2026 understand on the slides it kind of sounds demand trackers increased margin. We're trying to figure out I think we were at four two that would I guess imply like a larger step up in margin, but the next year.

Ryan Brinkman: Got it. Thank you.

our customers were, you know, we've done a lot of the team prior when I got here. I had done a lot of good work on ref foot printing that business and I think we as a cost Advantage, um, model right now and and we are picking up share at our at the Big 3 customers that we have exposure to here in North America, which is helping to offset some of the, some of the market deterioration. Yeah. That that's a, that's a really good point, right? Our our share at some of these as as increased, you know, significantly, um, over the past 12 months. And we can we we expect that to, to hold and, and continue to increase.

Thank you.

Regina: Our next question will come from the line of Dan Levy with Barclays. Please go ahead.

Dan Levy: Hi Joshua, Dan. Thanks for taking my question as my first one. I just was kind of trying to wonder how we should bridge the Q4 margin into 2026. Understand on the slides it kind of shows the main drivers and increased margin. We're trying to figure out if there's anything weird in Q4 that wouldn't, I guess, imply like a larger step up in margin in the next year.

Our next question will come from the line of Dan Levy with Barclays. Please go ahead.

No I mean these are really the.

You look at page 12, right those those basis points are off of our total 2025 full year full year yeah.

Continuing ops basis financials, so they're not they're not off of the fourth quarter, but obviously when you look at the fourth quarter, it's highly indicative of what we why we believe the full year overall run rate bridges into that 10% to 10, 5% next year.

Timothy Kraus: No, I mean these are really, if you look at page 12, right. 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 what we, why we believe the full year overall run rate bridges into that 10% to 10.5% next year.

Hi, it's Josh on fedan today. Thanks for taking my question. As my first 1, I just was kind of trying to wonder how we should Bridge the 4q margin into 2026 understand on the slides that kind of shows. The main drivers increase margin. We're trying to figure out if there's anything, you know, we would in for a cue that wouldn't I guess, imply like a larger step of in margin than next year.

Okay. So I guess, we should assume.

I guess a decent portion of those the main drivers are included already within the <unk> margin.

So I think about the cost savings of 100 basis points I mean, our fourth quarter. When you look at the when you look at the full run rate out of out of 2025, right. We're going to deliver $2 35, we had 10 last year, that's already $2 45 $245 million off of sort of where we were at.

Um no. I mean these These are really the the the if you look at page 12, right, those those bases points are off of our, our, you know, total 2025 full year. Yeah. Uh, you know, continuing Ops basis financials. So they're, they're not, they're not off of the fourth quarter. But but obviously, you know, when you look at the fourth quarter, it's highly indicative of what we why we believe the the full year, you know, overall run rate bridges into that 10 to 10 and a half percent next year.

Dan Levy: Okay. I guess we should assume that, I mean, a decent portion of those main drivers are included already within the Q4 margin.

Timothy Kraus: Yeah. Think about the cost saving. 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, $245 million off of sort of where we were at in 2024. Like that incremental $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, ish, 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.

In 2024, so like that incremental.

$65 million of our $75 million of Av.

Our cost savings runs through next year and while the full run rate of $3 10, So that's a 100 basis points ish right there.

And then stranded costs right, we just talked about that that that that adds some.

Incremental margin in the business because right now when you look at our continuing ops is burdened with the stranded costs that that we expect to take out.

Okay, so I guess we should assume that. I mean, I guess a decent portion of those, the main drivers are included already within the 4q margin well, so, so so so yeah. Think about the cost savings, it's a 100 basis points. We we, I mean, our our fourth quarter. When you look at the, when you look at the the full run rate out of out of 20205, right? We're we're going to deliver 235. We had 10 last year, that's already 2. 245 245 million uh, off of, you know, sort of where we were at in in 2024. So like that incremental, you know, 65 million dollars of or 75 million dollars of of of of

So.

So to say, it's modestly I think from our perspective, moving from where we're at on on a full.

Average basis, this year to 10% to 10 and a half next year, we do not see assuming the markets holdup.

Of cost savings runs through next year and we'll have a full run rate of 310. So that's a 100 basis points is right there. Um, you know, and then you know, stranded costs, right? We we just talked about that, that that that adds, you know, some uh, incremental margin in the business because right now, when you look at our our continuing Ops, it's burdened with the stranded costs that uh, that we expect to take out. Um,

Timothy Kraus: 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 to 10.5 next year. We do not see, assuming the markets hold up, that we're going to have any trouble getting to 10 to 10.5% next year. Again, our fourth quarter run rate supports that in very strong manner.

That we're going to have any trouble getting to 10% 10, 5% next year and again R. R.

Fourth quarter run rate supports that in very strong manner.

Got it thank you and I'll just follow up I know you mentioned some of your key platform volumes are holding in next year.

Are your customers how much of that just given the regulatory environment. Some of the platforms could go to I guess, a richer mix of off road performance trends I was just wondering if you would have like.

Quarter run rate supports that in very strong manner.

Dan Levy: Good, thank you. As a 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, off-road performance trims. I was just wondering if you would see a significant benefit from some of those powertrain changes.

A significant benefit from some of those powertrain changes yes.

Yes, I mean, obviously better mix.

We're the.

We're one of the original creators of the four wheel drive vehicle, we created the wrangler the Jeep.

For the government and World for World War, II, So, yes richer mix.

Timothy Kraus: Yeah, I mean, obviously better mix. I mean we're one of the original creators of the four-wheel drive vehicle. We created the Wrangler or the Jeep for the government and for World War II. Yeah, richer mix, larger axles. If you think of 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.

Larger axles. So if you think at wrangler right of that mix moves further to Rubicon, that's much better for us we have more content on it.

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

The same would be true for Bronco and.

Bruce already mentioned Super duty with Ford's plans to expand that capacity and build more trucks.

For us that's that's a.

Great program to have have content that content. If it gets richer is better for us as it is for the OEM.

Yeah.

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 had a follow up on the sequential margin increase of $2 20 on lower sales.

Yeah. I mean, obviously better myths, I mean, where are the, where are the original creators of the 4-wheel drive vehicle? Where we're we're, we're, we we created the the Wrangler or the Jeep for, for, for, for, for the government and world, for World War II. So yeah, richer mix uh, uh, larger axles. So if you think it Wrangler, right? If that mix moves further to Rubicon, that's that's much better for us, we have more content on it. Um, the same would be true for Bronco and, you know, you know, Bruce already mentioned Superduty, with Ford's plans to expand that capacity and build more trucks. Um, you know, for us that's, you know, that's a uh, that's a great program to have on have content on and that content is if it gets richer is better for us. Um, as it is for the OEM

Just things aren't capturing all the factors you have the incremental cost savings from Q3 to Q4, I think you mentioned like $20 million of EV headwinds and those will get recovered so looks like sorry.

Regina: Our final question will come from the line of Colin Langan with Wells Fargo. Please go ahead.

Colin Langan: Oh, great. Thanks for taking my questions. I just want to follow up on the sequential margin increase of 220 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 $20 million of EV headwinds and those will get recovered. It's like, sorry, $10 million of headwinds 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 action, so I'm a little surprised there's even more coming sequentially in Q3 and Q4.

Our final question will come from the line of Colin Langan with Wells Fargo. Please go ahead.

$10 million of headwinds, we'll get recoveries of a $20 million, maybe swing quarter over quarter, and then I think mix where are those the big factors in them.

Little surprised by the I thought you said in the last quarter you had taken most of the actions some old surprised theres, even more coming sequentially in Q3 and Q4.

When you say currently this is Tim and we say actions what are you talking about fractions you talked about the.

The cost saving actions.

Yes, so I thought that was the comment you made.

I mean.

But I mean.

We had a we still have additional.

Timothy Kraus: 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.

Actions coming through through the third and into the fourth now I think the the.

The incremental.

Colin Langan: Yes, I thought that was the comment you made last.

Oh, great, thanks for taking my questions. I I just want to follow up on the sequential margin increase of 220 on lower sales. I mean, just making sure our capturing all the factors. You have, the incremental cost savings from Q3 to Q4, I think you mentioned like 20 million of EV headwinds and those will get recovered. So, it's like sorry, 10 million of headwinds will get recovered. So a 20 million maybe swing, quarter over quarter. And then I think mix are those, the, the big factors and then I'm a little surprised by the I thought you said end, the last quarter you had taken most of the actions. So I'm a little surprised. There's even more coming sequentially in Q3 and Q4 in the when you say Colin, this is Tim. And when you say actions, what are you talking about? For actions, you talked about the um the cost saving actions.

Or a sequential savings will be lower in the fourth quarter. It's implied when you look at our 235, so they're obviously slowing down but.

Timothy Kraus: Yeah, no, I mean, we still have additional actions coming through the third and into the fourth now. I think the incremental or sequential savings will be lower in the fourth quarter. It's implied when you look at our $235. They're obviously slowing down, but we're on track to have a run rate exit at $310 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.

We're on track to have a run rate exit at $3 10 coming out, but we do have.

We do have those actions. There is also additional performance actions at the plant level.

That will come through in the fourth quarter I mentioned, Hey, we're in the middle of rationalizing some product and that's been a headwind for us.

Our performance.

Yes, I thought that was the comment, you made. Yeah, I know we, we I mean but but but you know I mean we we've we we had a we still have additional uh, actions coming through um, through the third and into the fourth. Now, I think the the incremental, um, or sequential savings will be lower in the fourth quarter, it's implied. You know, when you look at our 235, so there are obviously slowing down. But all right, we're we're on track to have a run rate exit at 3:10 coming out, but we

And in the volume and mix through the first three quarters of the year, we do see that improving as well. So that's all of that combined continues to drive that margin.

We do have. Um, we do have those actions. There's also additional performance actions at the plan.

From quarter to quarter.

Okay got it and then 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 easy cancellations.

And on the call.

Level, uh, that will come through in the fourth quarter. I, I mentioned, hey we're in the middle of of of rationalizing, some product and and that's been a headwind for us uh, in our performance. Uh, uh, and in in the, um, the volume and mix through the first 3 quarters of the year, we, we do see that improving as well. So that that's all of that combined continues to, to drive that margin, um, from quarter to quarter up,

Colin Langan: 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?

In the past it was like 70% or something.

What are some of the ice launches that are going to help as we think about next year, yes.

So I don't want to I don't want to get into the specifics but.

Our backlog has been impacted by by program delays and cancellations.

I think what we want to do is we'll take you through a pretty fulsome review of backlog and how it looks and how it shakes out.

Timothy Kraus: 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.

In January.

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 have or give you the full information and be able to answer your questions. Then so I think.

That's that's it but we do see increases in ice no question about it from backlog perspective.

Ian.

A proportion of there'll be more eyes.

Okay. Got it. And then I think in the past you've mentioned that the 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. And in the past it was like 70% EV or something. Um, what are some of the the the ice launches that are going to help as we think about next year? Yeah. So I I don't want to, I don't want to get into the specifics but, you know, I, you know, our our backlog, you know, it has been, you know, I impacted by by program delays and cancellations. Uh, I I think what we we want to do is, we'll take you through a, a pretty wholesome review of backlog and, and how it looks and, and how it shakes out, um, in in January or, you know, probably mid January. So, that that you, you, you get a really full view. We're right in the middle of of finalizing our plans for new Dana. Uh, and we, we want

Okay, but there's nothing that has anything changed since the last quarter with the.

Departments on yes sure.

We haven't had cancellations in EV.

Bruce McDonald: There's EV in there, but the proportion will be more ICE.

Talked about the sort of a headwind.

An opportunity to to, to really have a, a give you the full information and and be able to answer your questions then. So I think um, I think that's that's it, but we, we do see increases in ice? No, no question about it from backlog perspective.

Alright.

Absolutely thats impacting.

Timothy Kraus: Yeah.

That will impact some of the backlog that we have out there and delayed.

Yeah, there's Eevee in there but but the proportion will be more ice. Yeah.

Colin Langan: Has anything changed since the last quarter with the comments on?

Timothy Kraus: Yeah, sure. Obviously we've had cancellations in EV. Like we talked about the headwinds, that's impacting. That'll impact some of the backlog that we have out there and delays.

Okay.

Okay.

Okay.

Maybe with that.

We'll sort of get into some closing comments here so first of all.

And it goes without saying thanks to the Dana team for continuing to deliver on our commitments.

Colin Langan: Yeah, okay, got it.

Okay, but nothing is has anything changed since the last quarter with the, the, the comments on? Yeah, sure. I mean, I mean obviously we've had cancellations and Evie. I mean we like we talked about the, the absolutely that that's impacting. Um, that will impact some, some of the, the backlog that we, we have out there and delays. Yeah.

Okay.

Like I said earlier in my comments despite.

Bruce McDonald: 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. 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 the 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. We're in great shape and basically at that run rate here this quarter.

External headwinds we're over delivering on the things that we can control and I couldnt 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 returned a substantial amount of capital to our shareholders and still be left with what we think is the best in class balance sheet in terms of our sector.

We committed to $200 million of cost reduction, which we subsequently up to 310 and we're in great shape and basically at that run rate here. This quarter and then 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 our some of these commitments last year, but hopefully.

Bruce McDonald: 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 % there and we'll sell a lot more details on our January call. Long term, I continue to see a lot of upside in terms of our margin potential.

The market also to recognize that.

The Dana team is delivering on its commitments.

Okay, um, hey, maybe with that. Um, we'll we'll sort of get into some closing comments here. So first of all, um, and it goes without saying, thanks to the Dana team for continuing to deliver on our commitments. Um, like I said earlier, in my comments, despite external headwinds were over delivering on the things that we can control and and I couldn't be prouder to be part of the team. Uh, you know, a year ago we committed to 3 things. 1 selling our off Highway business and we're very close to having that done. When that has been completed. Uh, we we will have returned a substantial amount of capital to our shareholders and still be last with what we think is the best in-class balance sheet in terms of our sector. Um, we committed to 200 million of cost reduction which we've subsequently up to 310 and we're in great shape. And basically at that run right here, this quarter and then lastly and very importantly, we we said, we could get to double digit margins in 2026 and we're

Despite some easy deterioration we have an impressive backlog that we will talk about.

exiting 2025 at that level.

In January it does have a combination of both ice and easy, but as we said before.

He will be a smaller percent there and we will sell a lot more details on our January call.

Um, and I know there was a healthy amount of skepticism around some of our uh, some of these commitments last year but hopefully um you know, the market will sort of recognize that we Dana The Dana teams delivering on its commitments. Um

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 to 10, 5% in 2026 combined with our balance sheet.

We believe we're going to be rewarded with multiple expansion and so I think we got an extremely.

Bruce McDonald: I think a combination of us getting our margins up to the double-digit and growing them beyond the 10-10.2% 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.

Motivated management team here I couldnt be prouder of the accomplishments year to date and I think our best days are in front of us and so with that thanks for joining us on our call today.

Yeah.

This will conclude today's call. Thank you all for joining you may now.

Despite, uh, some EV deterioration, uh, we have an impressive backlog that we will talk about in January. Um, it does have a combination of both ice and Evie, but as we said before, Evie, it'll be a smaller percent there and we'll see a lot more details in our January, call long term. I continue to see a lot of uh 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 to 10 and a half percent in 2026 combined with our balance sheet. Um, you know, we we believe we're going to be rewarded with multiple expansion and so I think we got an extremely uh, motivated management team here. Uh, I couldn't be prouder of the accomplishments year to date and I think our best days are in front of us. And so with that, thanks for joining us on our call today.

Regina: This will conclude today's call. Thank you all for joining. You may now disconnect.

This will conclude today's call. Thank you all for joining. You may now disconnect.

[Analyst]: SA.