Dana CFO Puts Cost Inflation At A 'Nine-Digit Number' As It Holds Its Profit Midpoint
Dana raised its 2026 sales outlook but kept adjusted EBITDA at about $825 million, citing cost inflation and delayed customer recoveries.
Dana, which makes axles, driveshafts and transmissions for on-highway vehicles, kept the midpoint of its 2026 adjusted profit outlook at about $825 million even as it raised sales guidance, because Chief Financial Officer Timothy Kraus said inflation is "a nine-digit number" the company has to overcome, he said on the company's third-quarter earnings call Wednesday.
Energy and freight lead the cost list
Asked by a JPMorgan analyst how much inflation had hurt the quarter, Kraus said commodities are not the largest driver; general inflation is, and energy and freight are probably two of the larger pieces. Most customer agreements recover actual commodity costs against an index, he said, but "don't have general cost or inflationary recovery mechanisms."
Dana is working to recover costs through price increases, often temporary ones, and Kraus said the timing is sometimes delayed. In some customer conversations, he said, the message is "there's just no way to recover this at this point, given where we're at in the cycle."
A large share of the offset comes from plant-level conversion cost improvements and purchasing, Kraus said. Customers also expect contractual price reductions, which he called a daily headwind. CEO Byron Foster pointed to automation as a lever; Dana has 38 automation deployments done and sees 56 more within the calendar year, worth a $20 million run rate of savings.
Sales outlook up, profit midpoint unchanged
Dana now expects 2026 sales of about $7.8 billion at the midpoint, plus or minus $50 million, a $50 million increase on stronger commercial vehicle demand and higher commodity recoveries, according to the earnings release and call. Adjusted EBITDA stays near $825 million, plus or minus $25 million, a margin of about 10.6%. Adjusted free cash flow is still about $325 million and diluted adjusted earnings per share about $2.
Third-quarter sales rose $121 million to $2.038 billion. Adjusted EBITDA rose $56 million to $218 million, a 10.7% margin. Adjusted earnings were 41 cents a share, against a loss of 4 cents a year earlier. Kraus confirmed to a UBS analyst that a labor charge of about $20 million hit performance in the quarter. Dana shares were down 9.04% at $24.74 in Wednesday trading, Seeking Alpha reported.
Buybacks and the Eaton deal
Dana raised its 2026 repurchase target to $469 million, buying back 6.6 million shares, or $200 million, in the quarter. Foster said the Eaton Mobility transaction, a tax-free split-off and reverse Morris Trust structure, is on track to close around the end of the first quarter of 2027, with one regulatory approval outstanding. A special shareholder meeting is expected December 7.
Whether buybacks continue after closing depends on Eaton being comfortable, Kraus said; otherwise Dana would use cash to cut debt. Dana targets $250 million of run-rate synergies within 24 months of closing.
Dana reports fourth-quarter and full-year results in mid-February, with the Eaton shareholder meeting set for December 7.
Sources
- Dana slips as earnings miss overshadows higher margins (DAN:NYSE) | Seeking Alpha — seekingalpha.com
- Dana Incorporated (DAN) Stock Price, News, Quote & History - Yahoo Finance — Yahoo Finance
- 3 EV Supply Chain Stocks Facing The China Threat In US Manufacturing — Yahoo Finance
- Dana Incorporated Reports Strong Third-Quarter Results; Eaton Mobility Transaction on Track; Increases Share Repurchases — prnewswire.com
