I could have talked to John for two hours, but I am very happy that the next company is just as easy to talk to for me. Dana has been a longtime participant in this conference, going back to one of its initial companies as Echlin, which was an automotive aftermarket supplier. Dana is based in Maumee, Ohio, and is a provider of, well, it is power conveyance, but really, it is the drivetrain of light and commercial vehicles.
There is probably no company here that has been transformed as much as it has been in the past year, and I am going to let Byron go through that. But we are delighted to have Byron Foster, who is the company's CEO, and was named in the spring of this year to lead this conference into its next phase as it completes a Reverse Morris Trust with Eaton's Mobility Group.
The company has about a $6.4 billion equity cap pro forma for the Eaton RMT, about an $8.5 billion total enterprise value. We are delighted to have Tim Kraus, the CFO, join Byron and Craig. Thank you very much for being here. Byron, please come up.
Okay, great. Thank you, Brian. Okay, good afternoon, everybody. I promise I will not bore you with a 100-page PowerPoint here, but we do have a couple slides I thought it would be relevant to just kind of frame a little bit about Dana and where we are at as we get into the conversation this afternoon. Let me Green button, right?
No, it is the other one.
Yeah, I got it. I got you.[crosstalk].
Okay. Thanks, Tim.
Oh, you guys want to read the disclaimers?
Six-point font. Okay, just to start with kind of framing Dana today, as Brian said, we have been through and are going through quite the transformation of our company, starting with the sale of our off-highway division that closed at the beginning of the year, building our strategy, go-forward strategy, which we refer to as Dana 2030, then ultimately working towards the close of the merger with Eaton's Mobility Group. But in terms of where we are today, we will close the year roughly at $7.8 billion of revenue. You can see very much a global company operating across 24 different countries. As Brian mentioned, we really play in the powertrain space in both the light vehicle and commercial vehicle end markets. We supply all the major OEs, as well as we have a good and growing aftermarket business as well.
We do that across close to 70 manufacturing facilities, and you can see 11 tech centers and over 5,000 customers when you really think about all of the aftermarket customers we serve, as well as the global OEMs. We just reported our third quarter results last week, I guess it was. Had a strong third quarter. We were really happy with the results. We came in at just over $2 billion of revenue, which is up $121 million over the same period last year. Our EBITDA, you can see, came in at $218 million, which is an increase of $56 million. Really, if you look at the margin progression, this is one of the things that we are most proud of. You can see we closed the quarter at 10.7% EBITDA margins, which is an increase of 220 basis points.
Our cost savings program is something that we kicked off at the end of 2024 in conjunction with the sale of our off-highway business. The program started with a target to get $200 million of cost out of our company, and as we got into it and we continued to raise the bar relative to our ability to get cost out and become a more lean company, you can see ultimately with a target of $325 million. Year to date, we have delivered $60 million, and so one of the final steps to get to the $325 million. We have got about $5 million left to go on that program, and it was really critical, A, for our competitiveness, our margins, as well as dealing with the stranded cost kind of left behind as a result of the off-highway sale.
Our share repurchases has been a big part of our story. We announced a $2 billion share repurchase program at the end of 2024. So far, we are just north of $1 billion that we have repurchased. Year to date, we had previously announced that we would repurchase $369 million worth of our shares. We have expanded that target for the year by $100 million, so that will bring us to $469 million here by the end of the year. Another big part of the repurchase story has been with the RMT structure of our merger with Eaton Mobility, whether or not we would be able to continue to buy back our stock after the close of that transaction.
We are still working closely with Eaton on that topic, and so we did not have an update to provide, but we continue to be active in the market up through closing of the transaction. Lastly, we gave a quick update on one of the five pillars of our Dana 2030 strategy around manufacturing excellence, specifically around automation. This is a big lever for us as we think about our go-forward ability to deal with inflation and cost competitiveness, driving an increased level of automation of our plants. We gave some examples of how we are doing that. A lot of good progress there, and we remain really excited about that opportunity as we go forward.
The other big part of the story is obviously, as part of our transformation, the combination with Eaton's Mobility Group. You can see in terms of what the resulting company is going to look like. We will go from that roughly $7.5 billion I talked about earlier to north of $11 billion. So, really increasing the size of the company and the scale of the company. The margin expansion piece is a big part of the story. I showed you in our Q3, we were around 10.7% EBITDA margins. The combined company will deliver margins closer to 15%. We are expecting the transaction to close at the end of Q1 of 2027.
Part of the story of the combination is getting at a big synergy opportunity. We have announced $250 million of synergies that we will be delivering as part of this combination within the first two years of closing. As we look at kind of how this positions us in the market, it expands our product portfolio in the powertrain. You can see that truck graphic, that classic truck. Really today, Dana plays in those blue products, so the axles, the prop shafts, and then Eaton, the Eaton product line is primarily the transmission, so the green part. Really a natural extension of the product portfolio.
Then lastly, from an aftermarket perspective, the transaction will double the size of our aftermarket business, and again, that is part of expanding the margins in the business as well. So, excited about this opportunity. We will talk more about it, I am sure, but again, on track to close at the end of Q1 2027. Then lastly, before we get into the conversation, we rolled out at our Capital Markets Day in the spring, our Dana 2030 plan to really say, "Okay, post off-highway, what does Dana look like? What is the game plan going forward?"
We talked about five pillars of that strategy, three growth-related, so our traditional product growth, aftermarket, and Applied Technologies, which is really leveraging the Dana technical capabilities and product portfolio to explore new opportunities and new markets for profitable growth. Then on the cost and margin expansion side, manufacturing excellence. I talked a little bit about automation as one example, but make versus buy, manufacturing footprint optimization all sit in that pillar, and then continuing to get at our structural cost. So now, that strategy, when we now overlay it with Eaton Mobility, our view is that it only accelerates the pillars from Dana 2030.
A lot of synergies, a lot of the same types of opportunities as we think about bringing Eaton together with Dana. We could not be more excited about this. Teams are hard at work in terms of the integration planning, the synergy planning, and again, look forward to continuing to transform the company as we go forward. Thanks. Then the last slide is just-- No problem. It is just, look, we are continuing to focus on keeping our eye on the ball on the core business, which is how we continue to be able to deliver strong quarterly results, and then getting ready for the combination with Eaton.
So, thank you for letting me run through that, Brian, and Happy to get into the conversation.
As you are getting seated, I think I will start with one maybe for Tim. I think Dana has shown a tremendous ability to take cost out and to really lean out its organization. I see the $250 million in run rate synergies for the Eaton Mobility business. Maybe talk about what the easiest buckets of that are for Dana to get right after.
Yeah, I think the easy ones are the ones you think of right away, overlapping corporate costs. They run a light vehicle business. We run a commercial vehicle business. I am sorry, they run both a light vehicle and commercial vehicle. We do as well. There is quite a bit of overlap when you think about just at the BU and the corporate level. Those costs will come out, I think, pretty easily. The way Byron and myself and the team are really approaching this is really a best athlete approach. We are really looking at this clean sheet basis, trying to make sure we get the best of both the Eaton and the Dana teams to come in and really be able to drive that forward.
Those are the big ones. Think about engineering. We engineer power conveyance or torque transfer products, a lot of gear. There's a lot of opportunities there, both in terms of where we're spending that, in terms of the number of tech centers. Those are probably the three largest areas.
Purchasing's another big one, right? We're expecting significant purchasing synergies. If you think about, to Tim's point, we're buying a lot of the same things, so our ability to get scale on the purchasing side is another.
Yeah, and if you think about for Eaton, Mobility isn't like any of their other products. So, they're kind of an island from a purchasing perspective, whereas for us, they're right in down the part, so.
Byron, most CEOs don't take over and then announce a doubling of the size of their company within a couple of months.
Just figured we'd make it interesting.
As you think about your first three years in the role, and the enhancements of the Dana 2030 plan, how do you make this conference into your own image as to what your vision is for where you need to go?
Hate to correct you, but it's been three months, Brian. But it feels like, it may feel like three years, but it's been three months.
No, I said the next three years.
Yeah, yeah, next three years. For us, I don't think about it as, "Hey, I'm stepping into the role. Now I've got to put my mark on the place and change everything." For us, a lot of this is about continuity of strategy and approach. I've been, along with Tim and Bruce, at the table as we've transformed the company, built our go-forward strategy, put the vision in place for the new company. We wanted this transition to be about continuity of strategy, because we believe in the strategy. We believe it's delivering real value for our customers and shareholders.
Now with Eaton, that only accelerates the plans we've had in place. I think the difference you may see under my leadership is we're going to get there quicker and faster. We're going to do a great job integrating these two great companies, and then create new opportunities on a go-forward basis.
One of the pillars of that Dana 2030 platform was aftermarket growth. That is one of the areas that I always knew Eaton did an excellent job with. Maybe talk about how, let us get into the weeds a little bit about how you grow that aftermarket, not only with what Eaton brings to the table, but maybe their channels and what that brings for?
Yeah, I think for us, as part of our core Dana 2030 strategy around aftermarket growth, we have been investing in that part of the business in terms of our product line offering, our distribution footprint, our ability to serve customers, and focusing on really breaking into the big box retailers. We were here and had a great opportunity to listen to AutoZone earlier. Big customer for us. We are growing with them, expanding the number of DCs that we participate in. If you think about that and what the team has been able to build on the Dana side, we now have a broader product portfolio that we can bring to bear that Eaton is not playing in that space, as one example.
As we think about serving the WDs, Eaton has boots on the ground in the field serving those channels, where our plans were to build that capability and grow in that regard, and now that capacity is there for us. I think the growth synergies both ways for Eaton and for Dana on the aftermarket side is a huge part of the story. We talk a lot about the cost synergies, which we are going to deliver. I am 100% confident of that. But we are increasingly refining the growth synergy opportunity, and aftermarket is a big part of that.
Yeah. You are now going to be much bigger in commercial vehicle. It will be maybe not quite as big as your light vehicle driveline, but approaching, right? How do you manage cyclicality and counter-cyclicality as those markets kind of either work in tandem or maybe a little bit more aggressively cyclical on the CV side?
Yeah, I think, look, we have to be smart about capacity planning. We have to get closer to our customers about their long-range strategies and plans. We are really thinking about how we think about the commercial vehicle business and our capacity more strategically with our customers versus transactionally and chasing kind of every customer and every opportunity so that we can balance the capacity. That is one. Two is, how do we make sure that we are leveraging the capacity across both commercial vehicle and light vehicles so that we are not building dedicated footprints that, when one market may be up and one may be soft, that we have utilization issues?
I think it is really being smart about capacity management and long-term planning in partnership with our customers. We are going through now kind of a good news, bad news problem in terms of the increase in CV demand and how we chase that increase with our customers in a smart way. I think that is bringing us all to the table to say, "How do we think about this and plan it differently and more strategically?
Yeah, look, both of our major end markets are cyclical. We are not going to change that. I do think when you think about the aftermarket side, right, a lot of aftermarket obviously companies here, as we grow that and that becomes a larger portion of the base of the business, that base then helps to offset some of the cyclicalities that are in the light vehicle and the commercial vehicle business. I do think adding Eaton, and while it does not necessarily change the nature of the end markets in terms of the cycles, building that aftermarket and making it robust and a bigger part does add that base and that foundation really for the company to be able to sustain and keep earnings where we need them.
Exactly. I mean, our aftermarket business will double as a part of the transaction and be north of 10% of the revenue of the total company.
Are there any legacy items to clean up from the off-highway sale that are potentially some cost items to come out, or is that more or less done?
Yeah, I mean, we're still working through. I mean, we have still some TSAs that we're working through with Allison, so those costs are still in the business that need to come out. But largely, we're working through it. I mean, one of the interesting opportunities here is some of the costs we were scheduled to take out, so think of back office shared service center, Allison didn't take that. We're bringing in obviously a business that's sized about the same. There's an opportunity there to redirect those resources and and use them productively within the combined Eaton.
Largely speaking, we are in really good shape relative to the stranded costs that were left in the business as a result of the sale of the off-highway business.
Byron, you ran the light vehicle business during the buildup and then subsequent fairly quick bust of EVs, right?
What did John call it? The head fake?
It was more of a head fake.
The EV head fake?
How are you positioning Dana for electrification now, including hybrids? What did that episode teach about propulsion to you?
Yeah, it is a great question, and it is a journey we have been on for five-plus years as we built these capabilities to get ready for the electrification of the world. Through that whole exercise, I would say we built a hell of a capability in terms of the products that our team developed for customers. A lot of those products never found their way to market, but several did. That capability is now part of the company, so we're not abandoning it, but our strategy has clearly changed. So one, from a product development standpoint, we're focused more on core platforms that we can leverage across customers and away from kind of bespoke products for a unique vehicle that may or may not deliver on its volumes.
Two, commercially, we just have a different commercial approach where we aren't willing to step into projects and bear all the risk when it comes to EVs. We're being much smarter and much more selective about programs and projects that might be interesting to us in the future. But I would tell you right now, in terms of activity, while we have one or two electrification projects that are launching, most of our development work and new projects are either on ICE or hybrid-type products. The good news is we have a suite of products and capabilities that can address wherever the powertrain demand goes over time, and we're obviously constantly working with our customers on their outlooks and what products they believe they'll need in the future.
We've got our scars from that whole event. We've gotten on the other side of kind of fixing the projects that have either seen significant volume reductions or cancellations, so we're in a better jumping-off point now, and we have a tighter strategy, I would say, going forward.
As far as maybe some of the more exciting areas within hybridization that you're looking at from a product perspective, where should we be hearing more about Dana in some alternative propulsion?
Well, I mean, because we focus, the products that we focus on tend to be kind of in the extreme high-duty cycle, off-road, pickup truck. That vehicle segment, as they think about electrification and hybridization, it is really about range-extended EVs. So, the projects that we are working on our customers in from a hybrid standpoint tend to be kind of this combination of a generator on board with a smaller electrified axle. Those are the types of things we are talking to customers about. But I would say even there, it is still kind of dwarfed compared to the ICE opportunities that we continue to see and deliver, and we are obviously taking advantage of the extension of the ICE vehicle and product lines.
Yeah. On your call last week, you did an excellent job. There are some of your customers that have a little bit too much product in the marketplace now, and they are working through some excess inventory. But on the other side, you have got some growth platforms that are offsetting that. Maybe talk about what you are seeing within the light vehicle driveline business as far as end market demand from your OEM partners, and where is there some excess?
Yeah. So, our largest programs or platforms, I would say if you were entering this space, you would want to be on the vehicles that we have the pleasure of supplying. Super Duty, as an example, is our largest vehicle. Demand for Super Duty remains strong. There is expansion with the Oakville plant coming on board. We are participating in that growth and excited about that opportunity. We continue to see new vehicle platforms from some of our key customers. We talked about a new pickup truck with Stellantis in the second quarter that we were excited to win that program and participate in that future development.
Again, our focus in those vehicle segments, the product we can bring to bear, the brand recognition, continues to give us opportunities to grow our traditional business with OEMs as they look to expand in that pickup truck, SUV segment. The other piece, I would say beyond the light vehicle, I talked a little bit about Applied Technologies. This is where, again, we're looking for opportunities in new markets to leverage Dana capability and products and expertise.
Defense, we highlighted in the second quarter as a big growth platform for us. We're participating today on a couple of projects. We have a couple more that we're in pursuit. We feel really good about our opportunities to grow in the defense space. And then, powersports is another area of opportunity for us that we're looking at. I would say between our Applied Technologies work stream, continuing to stay focused on our traditional customers, the tailwind in the CV market that we're seeing now in North America, profitable growth is going to continue to be a part of our story.
Yeah. As you're[crosstalk].
Go ahead, Brian.
Okay. You're working with Eaton on the ability to continue buybacks. I'm just curious, and just with the Reverse Morris Trust transaction, the Eaton shareholders will own 50% plus one share of Dana, more or less. As you're thinking about the leverage of this business and clearly thinking that shares, and I agree, are undervalued here, how do we think about capital structure and for what you want new Dana to be?
Yeah, I think we've kind of laid this out, right, with the transaction with Eaton. We'll exit the closing about 1.5x, 1.6x turns of net leverage. As we started to really revamp the company, sell the off-highway business, our view was that we'd like to see 1x turn of net leverage over the business cycle. We still believe that's the right place, even with the larger company to be. We think it just gives us a lot more flexibility for what we want to do. With the Reverse Morris Trust, we won't be able to buy back stock, at least currently. We're still in discussions with Eaton, but there is a number of hurdles for that around it.
Our plan would be to use the excess cash flow to reduce that leverage down below the 1.6x that we're going to exit at, and then resume those buybacks immediately following the 24-month period. Now, what we have been able to do since we signed the deal is come to an agreement with Eaton to allow us to continue to buy back stock post-signing. And we announced last week that we're going to buy back another $100 million worth of stock. So, we'll do $469 million worth of buybacks this year. We continue to believe the stock's undervalued, especially kind of where it trades at today.
And we have every intention and plan to complete the $2 billion buyback that was authorized earlier this year, really early in 2029, as soon as we're able to. I think the good news when you think through the amount of capital that the combined business is going to generate really over the next two, three, four years, it's going to give us an opportunity to really be able to both manage the balance sheet and put forth a lot of capital towards additional returns to the shareholder, and still give us opportunities to fill in places where we think we need to grow the business.
Certainly, capital return to the shareholder is still a core part of our capital allocation strategy and will continue to be so.
I think one of the and I'll just wrap up with this. You've been one of the operational achievers over the course of the last three or four years with what you, under you, Byron, on the light vehicle side, and Tim as CFO, have done to make this such a better business. And I am hopeful, and I'm expecting the market to positively react to that once you all are together and you start to tell that story as well.
Appreciate that.
Thank you very much once again for being here. And best of luck as you take the helm.
Great. Thank you, Brian.
Thanks, Brian.