Dauch Corporation Q1 FY2026 earnings call

• First quarter 2026 sales were $2.38 billion, adjusted earnings per share was $0.34, adjusted pre-cash flow was a use of $41 million. North American production down ~2%, Europe down ~1%, global production down ~3%. Legacy sales flat on quarter, pro forma combined sales up slightly. - Received ~$21 million in net proceeds from sale of Dow Lay's cylinder line of business. - Awarded supply of PTUs and RDMs on a derivative model with Cherry J Tour, start of production later this year. - Awarded business extension for major truck platform in Brazil with lifetime revenue over $750 million, scheduled to launch later this decade. - Received contract extension awards with multiple customers. - Earned numerous SideChat business wins. - Metal forming business unit realizing wins across multiple product families. - Already realized $35 million of run rate savings from Dow Lay acquisition, on track to achieve year-end target run rate savings of >$100 million, expect $180 million run rate savings by end of year two and $300 million by end of year three. - Global geopolitical risks remain an overhang, especially Iran conflict driving elevated oil, energy, and gas prices, but no significant impact on operations or customer schedules in first quarter.

First quarter 2026 sales were $2.38 billion. Adjusted EBITDA was $308.5 million, or 13% of sales. Legacy DOWC had volume mix and other lowered by $9 million, divestiture of India commercial vehicle axle business had $35 million impact, metal market pass-throughs and FX increased sales by ~$44 million. Dowley contributed $983 million in gross sales for the first quarter (reflecting only February and March activity). Adjusted EBITDA for Legacy Dow was higher due to favorable mix on volume, continued performance, and net favorable metal markets and FX. Dolly contributed approximately $122 million in adjusted EBITDA for the quarter.

Revised outlook with raised sales and adjusted EBITDA. Targeting sales of 10.3 to 10.5 billion, adjusted EBITDA range of approximately 1.3 to 1.425 billion, adjusted free cash flow of approximately $235 to $325 million. Production assumptions: North America 15 million units, Europe ~16.7 million units, China 32.3 million units, overall global production 91.4 million units. Second quarter schedules okay, but experiencing additional energy costs, expect tariff recovery timing spread throughout year. CapEx assumption unchanged at 4.5% to 5% of sales. Fully diluted share count expected to be approximately 245 million shares going forward.

Global geopolitical risks, especially Iran conflict driving elevated oil, energy, and gas prices, which could impact through higher energy, logistic, and transportation expenses, as well as certain petroleum-based input costs such as lubricants.

Q: Joe Sack at UBS asked about definitional changes and equity income.

A: David and Chris responded on definitional changes and equity income being inclusive as previously assumed.

Q: Alex Perry at BOA asked about sales guide and energy costs.

A: Chris responded on sales guide driven by mix and FX, and energy costs with $5 million to $10 million impact in second quarter.

Q: Tom Naran with RBC asked about LTM EBIT and guide.

A: Chris and David responded on LTM analysis and drivers of variance.

Q: Jake show at BNP asked about pro forma net leverage.

A: David responded on timeline to get to targeted 2.5 leverage.

Q: Vanessa Jeffries at Jeffries asked about powder metallurgy and EV commercial cancellation settlement payments.

A: David and Chris responded on powder metallurgy strategic initiatives and EV settlement payments.

Q: Federico Moretti with Wolf Research asked about free cash flow guidance.

A: Chris responded on cash flow impacted by working capital from higher sales.

Q: Doug Carson at BOA asked about EPA changes.

A: David responded on benefits of EPA changes to OEMs and company.