James Mulholland

James Mulholland from Deutsche Bank asked about the short-term economic opportunity of the Trane partnership, including expected contribution in 2027, margin accretion, and CapEx allocation. He also inquired about other opportunities to leverage Garrett's technology in the data center market, such as power generation, and potential inorganic acquisitions.

Answer

Olivier Rabiller (President and CEO) explained that the Trane partnership's real ramp-up begins in 2027, with revenue expected to exceed 5% by the end of the decade, and confirmed it will be accretive from the start of production, with CapEx included in the 2026 guidance. He also noted significant, faster-than-anticipated growth in data center-driven Genset demand and cooling, leveraging existing differentiated technology.

James Mulholland asked about the economic opportunity of the Trane partnership, including expected contribution in 2027, margin accretion, and CapEx allocation for this new venture. He also inquired about Garrett's strategy for diversifying into power generation for data centers, potential for other tech stack applications, and interest in inorganic acquisitions.

Answer

Olivier Rabiller (President and CEO) stated that the Trane partnership's real ramp-up begins in 2027, targeting over 5% of revenue by the end of the decade, with CapEx included in the 2.5% guidance for 2026. He confirmed the new product line is accretive from the start of production. Regarding data centers, Mr. Rabiller highlighted consistent strategy, significant growth in Genset (data center-driven), new product range, OE wins, and retrofitting, noting faster-than-anticipated growth in industrial turbos and cooling.

James Mulholland asked about Dana's strategy for deploying a projected materially higher cash position by 2030, considering existing share buyback and dividend plans, and whether further inorganic investments or shareholder returns are being considered. He also inquired about the potential for additional divestitures of non-core operations, specifically if other parts of the business could be separated as cleanly as the Off-Highway segment.

Answer

Senior Vice President and CFO Timothy Kraus noted the significant increase in capital return to shareholders and mentioned flexibility for future acquisitions or other inorganic investments to accelerate growth beyond 2026. He also highlighted the option to reduce leverage or return more capital to shareholders depending on market conditions. Timothy Kraus confirmed that there are smaller, imminently separable businesses (e.g., JVs, plants, product lines) that the company will continue to evaluate for divestiture, though nothing on the scale of Off-Highway.

James Mulholland asked about Dana's plans for a projected materially higher cash position by 2030, beyond outlined share buybacks and dividends, inquiring if further inorganic investments or additional shareholder returns were being considered. He also followed up on potential divestitures of non-core operations, asking if other business segments could be as cleanly separated as the Off-Highway business or if specific areas were currently under consideration.

Answer

Senior Vice President and CFO Timothy Kraus stated that the company maintains flexibility, potentially using cash for acquisitions to accelerate growth, but emphasized the current focus on executing the plan and delivering superior shareholder returns. He also noted the option to reduce leverage or return more capital depending on market conditions. Timothy Kraus confirmed that the company is continuously evaluating smaller divestitures, including individual joint ventures, plants, or product lines, which are considered 'imminently separable,' though none are on the scale of the Off-Highway business.

James Mulholland asked about the anticipated improvement in the U.S. commercial vehicle market (Class 8 orders), its potential spread to other geographies, and the company's long-term target of 10% SOI margin.

Answer

EVP and CFO Christina Zamarro outlined expectations for Americas commercial OE and replacement, and EMEA commercial volumes, noting growth off a low base. CEO Mark Stewart reaffirmed the commitment to the 10% SOI target, highlighting strong Q4 performance in consumer segments and ongoing Goodyear Forward execution.

James Mulholland asked about the anticipated improvement in the U.S. commercial vehicle market, its potential spread to other geographies, and whether Goodyear still targets a 10% SOI margin given the completion of Goodyear Forward.

Answer

CFO Christina Zamarro indicated Americas commercial OE is expected to be up high teens/low 20% in H2 2026 (off a low base), with EMEA commercial OEM replacement growing low to mid-single digits. She noted 2025 commercial unit sales were 11 million, below the 12-13 million needed for historical margins. CEO Mark Stewart affirmed that the 10% SOI target remains, acknowledging it's a push-out due to the commercial downturn, and emphasized continued execution of Goodyear Forward for cost efficiency and driving a richer product mix.

James Mulholland, on behalf of Deutsche Bank, requested a detailed breakdown of the significant 'other costs' within the inflation bucket on the financial walk. He also asked about the expected future impact of the commercial vehicle headwind on segment operating income (SOI) and whether the current quarter represented the peak of this negative impact.

Answer

EVP & CFO Christina Zamarro clarified that the 'inflation and other costs' bucket includes three main drivers: $225 million in annualized inflation, a newly increased $350 million in annualized tariff costs, and incremental manufacturing inefficiencies related to factory ramp-downs under the Goodyear Forward plan. Regarding the commercial vehicle business, she indicated the headwinds would persist, quantifying a $30 million mix impact, an additional $25 million in unabsorbed overhead in the second half, and $20 million in new annualized tariff costs from Brazil and Vietnam.