REG - Dauch Corporation - Dauch Reports First Quarter 2026 Financial Results
08/05/2026 13:00
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RNS Number : 5460D Dauch Corporation 08 May 2026
Dauch Reports First Quarter 2026 Financial Results
Positive Momentum With The Dowlais Acquisition
DETROIT, May 8, 2026 -- Dauch Corporation ("Dauch") (NYSE: DCH; LSE: DCH)
today reported its financial results for the first quarter 2026.
First Quarter 2026 Results
• Sales of $2.38 billion
• Net loss attributable to Dauch of $(100.3) million, or (4.2)% of
sales
• Adjusted EBITDA* of $308.5 million, or 13.0% of sales
• Diluted loss per share of $(0.52); Adjusted earnings per share*
of $0.34
• Net cash provided by (used in) operating activities of
$(64.4) million; Adjusted free cash flow use of $(40.8) million
"The company's first quarter results highlighted a strong start for the new
Dauch Corporation," said Chairman and Chief Executive Officer, David C. Dauch.
"As we begin to capture integration synergies and leverage our combined
operational strengths, we are excited about the compelling value and
long‑term strategic benefits of this transformational acquisition."
The acquisition of Dowlais Group plc (subsequently renamed Dowlais Group
Limited) ("Dowlais") was the primary driver of year-over-year changes in
financial results.
The company's sales in the first quarter of 2026 were $2.38 billion as
compared to $1.41 billion in the first quarter of 2025.
The company's net loss attributable to Dauch in the first quarter of 2026 was
$(100.3) million, or $(0.52) per share and (4.2)% of sales, as compared to a
net income of $7.1 million, or $0.06 per share and 0.5% of sales in the first
quarter of 2025.
Adjusted earnings per share in the first quarter of 2026 was $0.34 compared to
Adjusted earnings per share of $0.22 in the first quarter of 2025.
In the first quarter of 2026, Adjusted EBITDA was $308.5 million, or 13.0% of
sales, as compared to $177.7 million, or 12.6% of sales, in the first quarter
of 2025.
The company's net cash provided by (used in) operating activities for the
first quarter of 2026 was use of $(64.4) million as compared to
$55.9 million for the first quarter of 2025.
The company's Adjusted free cash flow for the first quarter of 2026 was a use
of $(40.8) million as compared to a use of $(3.9) million for the first
quarter of 2025.
* For the three months ended March 31, 2026, based in part on our recent
Business Combination and to more effectively measure our global business
profile, we revised our definition of Adjusted EBITDA and Adjusted EPS to
exclude the impact of unrealized foreign exchange gains and losses on acquired
U.S. Private Placement Notes, mark-to-market on nondesignated foreign exchange
derivatives assumed as part of the Business Combination with Dowlais, gains
and losses on the disposal of property, plant and equipment, and amortization
of the acquisition intangible asset attributable to our investment in Shanghai
GKN HUAYU Driveline Systems Co Limited (SDS). In addition, specific to
adjusted EPS, amortization of intangible expense related to acquisitions are
also excluded. Refer to endnotes (a) and (b) for additional detail. The
aforementioned items are non-cash adjustments.
Dauch's Updated 2026 Financial Outlook
Dauch's full year 2026 financial targets which include a partial year
contribution from Dowlais (as of February 3, 2026 close) are as follows:
• Sales in the range of $10.3 - $10.8 billion vs. $10.3 - $10.7
billion prior.
• Adjusted EBITDA in the range of $1.3 - $1.425 billion vs. $1.3 -
$1.4 billion prior.
• Adjusted EBITDA includes synergy benefits of $50 - $75 million,
equating to a run rate of greater than $100 million by the end of year one.
• Equity income from our China JV (which is included in Adjusted
EBITDA) in the range of $65 - $75 million.
• Adjusted free cash flow in the range of $235 - $325 million.
• Capital expenditures in the range of 4.5% to 5% of sales.
• Restructuring cash payments of $110 - $150 million.
• Synergy implementation cash payments of $100 - $125 million.
These targets are based on the following assumptions for 2026:
• Production outlook:
North America Europe China Global
~15.0 million ~16.7 million ~32.3 million ~91.4 million
• Production estimates of key programs that we support and the
current operating environment.
• No changes to USMCA and mitigation of a majority of incremental
tariff costs.
First Quarter 2026 Conference Call Information
A conference call to review Dauch's first quarter results is scheduled for
today at 10:00 a.m. ET. Interested participants may listen to the live
conference call by logging onto Dauch's investor web site at www.dauch.com or
calling (877) 883-0383 from the United States or (412) 902-6506 from outside
the United States with access code 5671631. A replay will be available one
hour after the call is completed until May 15, 2026 by dialing (855) 669-9658
from the United States or (412) 317-0088 from outside the United States. When
prompted, callers should enter replay access code 7522883.
Non-GAAP Financial Information
In addition to the results reported in accordance with accounting principles
generally accepted in the United States of America (GAAP) included within this
press release, Dauch has provided certain information, which includes non-GAAP
financial measures such as Adjusted EBITDA, Adjusted earnings per share and
Adjusted free cash flow. Such information is reconciled to its most directly
comparable GAAP measure in accordance with Securities and Exchange Commission
rules and is included in the attached supplemental data.
Certain of the forward-looking financial measures included in this earnings
release are provided on a non-GAAP basis. A reconciliation of non-GAAP
forward-looking financial measures to the most directly comparable
forward-looking financial measures calculated and presented in accordance with
GAAP has been provided. The amounts in these reconciliations are based on our
current estimates and actual results may differ materially from these
forward-looking estimates for many reasons, including potential event driven
transactional and other non-core operating items and their related effects in
any future period, the magnitude of which may be significant.
Management believes that these non-GAAP financial measures are useful to
management, investors, and banking institutions in their analysis of Dauch's
business and operating performance. Management also uses this information for
operational planning and decision-making purposes.
Non-GAAP financial measures are not and should not be considered a substitute
for any GAAP measure. Additionally, non-GAAP financial measures as presented
by Dauch may not be comparable to similarly titled measures reported by other
companies.
Definition of Non-GAAP Financial Measures
Dauch defines Adjusted earnings per share to be diluted earnings (loss) per
share excluding the impact of restructuring and acquisition-related costs,
debt refinancing and redemption costs, gains or losses on the derivative
associated with our Business Combination with Dowlais, net interest on debt
held in escrow, gains or losses on equity securities, impairment charges,
unrealized foreign exchange gains and losses on acquired U.S. Private
Placement Notes, mark-to-market on nondesignated foreign exchange derivatives
assumed as part of the Business Combination with Dowlais, gains and losses on
the disposal of property, plant and equipment, amortization of the acquisition
intangible asset attributable to our investment in SDS, net of tax,
amortization of intangible assets from acquisitions, and non-recurring items,
including the tax effect thereon.
Dauch defines EBITDA to be earnings before interest expense, income taxes,
depreciation and amortization. As revised, Adjusted EBITDA is defined as
EBITDA excluding the impact of restructuring and acquisition-related costs,
debt refinancing and redemption costs, gains or losses on the derivative
associated with our Business Combination with Dowlais, interest income on debt
held in escrow, gains or losses on equity securities, impairment charges,
unrealized foreign exchange gains and losses on acquired U.S. Private
Placement Notes, mark-to-market on nondesignated foreign exchange derivatives
assumed as part of the Business Combination with Dowlais, gains and losses on
the disposal of property, plant and equipment, amortization of the acquisition
intangible asset attributable to our investment in SDS, net of tax, and
non-recurring items.
Dauch defines free cash flow to be net cash provided by (used in) operating
activities less capital expenditures net of proceeds from the sale of
property, plant and equipment. Adjusted free cash flow is defined as free cash
flow excluding the impact of cash payments for restructuring and
acquisition-related costs and interest income on debt held in escrow.
Company Description
Dauch Corporation is a premier Driveline and Metal Forming supplier serving
the global automotive industry with a powertrain-agnostic product portfolio
that supports electric, hybrid, and internal combustion vehicles. The company
is headquartered in Detroit, MI, with operations that span 24 countries and
more than 175 locations. Formed through the acquisition of Dowlais and its
subsidiaries - GKN Automotive and GKN Powder Metallurgy, Dauch unites deep
engineering roots with global manufacturing capabilities and an
entrepreneurial spirit to move mobility forward. Visit www.dauch.com to learn
more.
Forward-Looking Statements
In this earnings release, we make statements concerning our expectations,
beliefs, plans, objectives, goals, strategies, and future events or
performance. Such statements are "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and relate to
trends and events that may affect our future financial position and operating
results. The terms such as "will," "may," "could," "would," "plan," "believe,"
"expect," "anticipate," "intend," "project," "target," and similar words or
expressions, as well as statements in future tense, are intended to identify
forward-looking statements. Forward-looking statements should not be read as a
guarantee of future performance or results and will not necessarily be
accurate indications of the times at, or by, which such performance or results
will be achieved. Forward-looking statements are based on information
available at the time those statements are made and/or management's good faith
belief as of that time with respect to future events and are subject to risks
and may differ materially from those expressed in or suggested by the
forward-looking statements. Important factors that could cause such
differences include, but are not limited to: global economic conditions,
including the impact of inflation, recession or recessionary concerns, or
slower growth in the markets in which we operate; reduced purchases of our
products by General Motors Company (GM), Stellantis N.V. (Stellantis) and Ford
Motor Company (Ford) or other customers; reduced demand for our customers'
products (particularly light trucks and sport utility vehicles (SUVs) produced
by GM, Stellantis and Ford); our ability to consummate strategic initiatives
and successfully integrate acquisitions and joint ventures; risks related to
disruptions to ongoing business operations as a result of the business
combination with Dowlais, including disruptions to management time; potential
liabilities or litigation relating to, or assumed in, the business combination
with Dowlais; our ability to respond to changes in technology, increased
competition, including as a result of the ongoing proliferation of Chinese
original equipment manufacturers in certain regions in which we operate, or
pricing pressures; our ability to develop and produce new products that
reflect market demand; lower-than-anticipated market acceptance of new or
existing products; our ability to attract new customers and programs for new
products; risks inherent in our global operations (including tariffs and the
potential consequences thereof to us, our suppliers, and our customers and
their suppliers, adverse changes in trade agreements, such as the United
States-Mexico-Canada Agreement (USMCA), compliance with customs and trade
regulations, immigration policies, political stability or geopolitical
conflicts, taxes and other law changes, potential disruptions of production
and supply, and currency rate fluctuations); supply shortages and the
availability of natural gas or other fuel and utility sources in certain
regions, labor shortages, including increased labor costs, or price increases
in raw material and/or freight, utilities or other operating supplies for us
or our customers as a result of pandemic or epidemic illness, geopolitical
conflicts, natural disasters or otherwise; a significant disruption in
operations at one or more of our key manufacturing facilities; risks inherent
in transitioning our business from internal combustion engine vehicle products
to hybrid and electric vehicle products; our ability to realize the expected
revenues from our new and incremental business backlog; negative or unexpected
tax consequences, including those resulting from tax litigation; risks related
to a failure of our information technology systems and networks, including
cloud-based applications, and risks associated with current and emerging
technology threats, and damage from computer viruses, unauthorized access,
cyber attacks, including increasingly sophisticated cyber attacks
incorporating use of artificial intelligence, and other similar disruptions;
our ability to maintain satisfactory labor relations and avoid work stoppages;
our suppliers', our customers' and their suppliers' ability to maintain
satisfactory labor relations and avoid or minimize work stoppages; price
volatility in, or reduced availability of, fuel; cost or availability of
financing for working capital, capital expenditures, research and development
(R&D) or other general corporate purposes including acquisitions, as well
as our ability to comply with financial covenants; our customers' and
suppliers' availability of financing for working capital, capital
expenditures, R&D or other general corporate purposes; an impairment of
our goodwill, other intangible assets, or long-lived assets if our business or
market conditions indicate that the carrying values of those assets exceed
their fair values; liabilities arising from warranty claims, product recall or
field actions, product liability and legal proceedings to which we are or may
become a party, or the impact of product recall or field actions on our
customers; our ability or our customers' and suppliers' ability to
successfully launch new product programs on a timely basis; risks of
environmental issues, including impacts of climate-related events, that could
result in unforeseen issues or costs at our facilities, or risks of
noncompliance with environmental laws and regulations, including reputational
damage; our ability to achieve the level of cost reductions required to
sustain global cost competitiveness or our ability to recover certain cost
increases from our customers; our ability to protect our intellectual property
and successfully defend against assertions made against us; adverse changes in
laws, government regulations or market conditions affecting our products or
our customers' products; our ability or our customers' and suppliers' ability
to comply with regulatory requirements and the potential costs of such
compliance; changes in liabilities arising from pension and other
postretirement benefit obligations; our ability to attract and retain
qualified personnel in key positions and functions; and other unanticipated
events and conditions that may hinder our ability to compete. It is not
possible to foresee or identify all such factors and we make no commitment to
update any forward-looking statement or to disclose any facts, events or
circumstances after the date hereof that may affect the accuracy of any
forward-looking statement.
# # #
For more information:
Investor Contact
David H.
Lim
Head of Investor
Relations
(313)
758-2006
david.lim@aam.com
Media Contact
Christopher M. Son
Vice President, Marketing & Communications
(313) 758-4814
chris.son@aam.com
Or visit the Dauch website at www.dauch.com.
DAUCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
2026 2025
(in millions, except per share data)
Net sales $ 2,378.9 $ 1,411.3
Cost of goods sold 2,153.5 1,237.4
Gross profit 225.4 173.9
Selling, general and administrative expenses 137.3 90.9
Amortization of intangible assets 22.9 20.6
Restructuring and acquisition-related costs 98.9 19.7
Operating income (loss) (33.7) 42.7
Interest expense (89.6) (42.9)
Interest income 12.1 5.6
Other income (expense):
Debt refinancing and redemption costs (3.0) (3.3)
Gain on Business Combination Derivative 12.9 21.9
Income from equity-method affiliates 10.3 0.1
Other expense, net (28.6) (3.0)
Income (loss) before income taxes (119.6) 21.1
Income tax expense (benefit) (19.6) 14.0
Net income (loss) $ (100.0) $ 7.1
Net income attributable to noncontrolling interests (0.3) -
Net income (loss) attributable to Dauch $ (100.3) $ 7.1
Diluted earnings (loss) per share $ (0.52) $ 0.06
DAUCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2026 December 31, 2025
(Unaudited)
ASSETS (in millions)
Current assets
Cash and cash equivalents $ 1,008.2 $ 708.9
Restricted cash - 1,496.6
Accounts receivable, net 1,535.1 733.0
Inventories, net 1,004.1 466.4
Prepaid expenses and other 344.3 230.1
Total current assets 3,891.7 3,635.0
Property, plant and equipment, net 4,209.3 1,591.5
Deferred income taxes 320.1 235.9
Goodwill 648.8 174.4
Other intangible assets, net 370.4 375.2
GM postretirement cost sharing asset 117.7 116.0
Operating lease right-of-use assets 183.5 122.3
Investments in equity-method affiliates 911.3 12.1
Other assets and deferred charges 619.3 407.8
Total assets $ 11,272.1 $ 6,670.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ - $ 10.4
Accounts payable 1,641.9 718.3
Accrued compensation and benefits 548.7 254.9
Deferred revenue 32.8 38.5
Current portion of operating lease liabilities 39.7 24.7
Accrued expenses and other 524.5 187.2
Total current liabilities 2,787.6 1,234.0
Long-term debt, net 5,156.7 4,039.1
Deferred revenue 42.1 33.9
Deferred income taxes 224.5 9.1
Long-term portion of operating lease liabilities 145.5 100.1
Postretirement benefits and other long-term liabilities 1,412.1 614.0
Total liabilities 9,768.5 6,030.2
Total Dauch stockholders' equity 1,498.3 640.0
Noncontrolling interest in subsidiaries 5.3 -
Total stockholders' equity 1,503.6 640.0
Total liabilities and stockholders' equity $ 11,272.1 $ 6,670.2
DAUCH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
2026 2025
(in millions)
Operating activities
Net income (loss) $ (100.0) $ 7.1
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities
Depreciation and amortization 181.8 112.2
Other (146.2) (63.4)
Net cash provided by (used in) operating activities (64.4) 55.9
Investing activities
Purchases of property, plant and equipment (103.6) (69.3)
Proceeds from sale of property, plant and equipment 0.9 0.6
Acquisition of business, net of cash acquired (331.6) (0.6)
Proceeds from sale of business, net 20.8 -
Proceeds from disposition of affiliates - 30.1
Settlement of Business Combination Derivative 65.9 -
Other 0.1 (1.0)
Net cash used in investing activities (347.5) (40.2)
Financing activities
Net debt activity (761.3) (15.8)
Other (14.2) (8.2)
Net cash used in financing activities (775.5) (24.0)
Effect of exchange rate changes on cash (9.9) 4.6
Net decrease in cash, cash equivalents and restricted cash (1,197.3) (3.7)
Cash, cash equivalents and restricted cash at beginning of period 2,205.5 552.9
Cash and cash equivalents at end of period $ 1,008.2 $ 549.2
DAUCH CORPORATION
SUPPLEMENTAL DATA
(Unaudited)
The supplemental data presented below is a reconciliation of certain financial
measures which is intended
to facilitate analysis of Dauch Corporation business and operating
performance.
Earnings before interest expense, income taxes and depreciation and
amortization (EBITDA) and Adjusted EBITDA((a))
Three Months Ended
March 31,
2026 2025((1))
(in millions)
Net income (loss) $ (100.0) $ 7.1
Interest expense 89.6 42.9
Income tax expense (benefit) (19.6) 14.0
Depreciation and amortization 181.8 112.2
EBITDA 151.8 176.2
Restructuring and acquisition-related costs 98.9 19.7
Debt refinancing and redemption costs 3.0 3.3
Gain on Business Combination Derivative (12.9) (21.9)
Unrealized foreign exchange loss on acquired U.S. Private Placement Notes 10.9 -
Mark-to-market on nondesignated foreign exchange derivatives assumed as part 15.6 -
of the Business Combination with Dowlais
Loss on disposal of property, plant and equipment 3.7 0.4
Interest income on debt in escrow (4.6) -
Amortization of acquisition intangible asset attributable to SDS 4.4 -
Non-recurring items:
Acquisition-related fair value inventory adjustment 37.7 -
Adjusted EBITDA $ 308.5 $ 177.7
(1) The amounts in the table above are presented based upon our revised
definition of Segment Adjusted EBITDA and amounts that were reported under the
previous definition have been recast. Please refer to note (a) on page 12.
In connection with the Business Combination with Dowlais, the Company acquired
long-term debt in the form of Dowlais U.S. Private Placement Notes, as well as
nondesignated foreign exchange derivatives, which result in unrealized foreign
exchange gains and losses recognized in our condensed consolidated Statement
of Operations. The Company adjusts for these gains and losses as they are not
reflective of our core operating performance. In addition, our equity-method
investment in SDS resulted in a basis difference that was attributed to
intangible asset and is amortized through equity-method income and losses. The
Company adjusts for this non-cash amortization as it is not reflective of our
proportionate share of earnings in SDS.
Adjusted earnings per share((b))
Three Months Ended
March 31,
2026 2025((1))
Diluted earnings (loss) per share $ (0.52) $ 0.06
Restructuring and acquisition-related costs 0.49 0.16
Debt refinancing and redemption costs 0.01 0.03
Gain on Business Combination Derivative (0.06) (0.18)
Unrealized foreign exchange loss on acquired U.S. Private Placement Notes 0.05 -
Mark-to-market on nondesignated foreign exchange derivatives assumed as part 0.08 -
of the Business Combination with Dowlais
Loss on disposal of property, plant and equipment 0.02 -
Net interest on debt held in escrow 0.04 -
Amortization of intangible assets from acquisitions 0.11 0.17
Amortization of acquisition intangible asset attributable to SDS 0.02 -
Non-recurring items:
Acquisition-related fair value inventory adjustment 0.19 -
Tax effect of adjustments (0.09) (0.02)
Adjusted earnings per share $ 0.34 $ 0.22
Adjusted earnings per share are based on weighted average diluted shares
outstanding of 200.4 million and 122.6 million for the three months ended
March 31, 2026 and 2025 respectively.
1) The amounts in the table above are presented based upon our revised
definition of Adjusted earnings per share and amounts that were reported under
the previous definition have been recast. Please refer to note (b) on page
12.
In connection with the Business Combination with Dowlais, the Company acquired
long-term debt in the form of Dowlais U.S. Private Placement Notes, as well as
nondesignated foreign exchange derivatives, which result in unrealized foreign
exchange gains and losses recognized in our condensed consolidated Statement
of Operations. The Company adjusts for these gains and losses as they are not
reflective of our core operating performance. In addition, our equity-method
investment in SDS resulted in a basis difference that was attributed to
intangible asset and is amortized through equity-method income and losses. The
Company adjusts for this non-cash amortization as it is not reflective of our
proportionate share of earnings in SDS. In addition, we have revised our
definition of Adjusted earnings per share to exclude the amortization of
intangible assets from acquisitions as this amortization is not reflective of
our core operating performance.
DAUCH CORPORATION
SUPPLEMENTAL DATA
(Unaudited)
The supplemental data presented below is a reconciliation of certain financial
measures which is intended
to facilitate analysis of Dauch Corporation business and operating
performance.
Free cash flow and Adjusted free cash flow((c))
Three Months Ended
March 31,
2026 2025
(in millions)
Net cash provided by (used in) operating activities $ (64.4) $ 55.9
Less: Capital expenditures net of proceeds from the sale of property, plant (102.7) (68.7)
and equipment
Free cash flow $ (167.1) $ (12.8)
Cash payments for restructuring costs 35.8 2.6
Cash payments for acquisition-related costs 86.7 6.3
Cash payments for synergy integration costs 8.4 -
Interest income on debt held in escrow (4.6) -
Adjusted free cash flow $ (40.8) $ (3.9)
Segment Financial Information((d))
Three Months Ended
March 31,
2026 2025
(in millions)
Segment Sales
Driveline $ 1,769.1 $ 987.0
Metal Forming 726.2 525.5
Total Sales 2,495.3 1,512.5
Intersegment Sales (116.4) (101.2)
Net External Sales $ 2,378.9 $ 1,411.3
Segment Adjusted EBITDA((a))
Driveline $ 238.8 $ 132.7
Metal Forming 69.7 45.0
Total Segment Adjusted EBITDA $ 308.5 $ 177.7
Full Year 2026 Financial Outlook
Adjusted EBITDA
Low End High End
(in millions)
Net loss $ (335) $ (180)
Interest expense 350 350
Income tax expense 70 40
Depreciation and amortization 825 825
Full year 2026 targeted EBITDA 910 1,035
Acquisition-related costs 65 65
Restructuring costs 120 120
Synergy integration costs 115 115
Acquisition-related fair value inventory adjustment 38 38
Amortization of acquisition intangible asset attributable to SDS 25 25
Unrealized foreign exchange loss on acquired U.S. Private Placement Notes 11 11
Market-to-market on nondesignated foreign exchange derivatives assumed as part 16 16
of the Business Combination with Dowlais
Full year 2026 targeted Adjusted EBITDA $ 1,300 $ 1,425
Adjusted Free Cash Flow
Low End High End
(in millions)
Net cash provided by operating activities $ 385 $ 410
Capital expenditures net of proceeds from the sale of property, plant and (500) (500)
equipment
Full year 2026 targeted Free Cash Flow (115) (90)
Cash payments for acquisition-related costs 140 140
Subtotal 25 50
Cash payments for restructuring costs 110 150
Cash payments for synergy integration costs 100 125
Full year 2026 targeted Adjusted Free Cash Flow $ 235 $ 325
___________
(a) We define EBITDA to be earnings before
interest expense, income taxes, depreciation and amortization. As revised,
Adjusted EBITDA is defined as EBITDA excluding the impact of restructuring and
acquisition-related costs, debt refinancing and redemption costs, gains or
losses on the derivative associated with our Business Combination with
Dowlais, interest income on debt held in escrow, gains or losses on equity
securities, impairment charges, unrealized foreign exchange gains and losses
on acquired U.S. Private Placement Notes, mark-to-market on nondesignated
foreign exchange derivatives assumed as part of the Business Combination with
Dowlais, gains and losses on the disposal of property, plant and equipment,
amortization of the acquisition intangible asset attributable to our
investment in SDS, net of tax, and non-recurring items. We believe that EBITDA
and Adjusted EBITDA are meaningful measures of performance as they are
commonly utilized by management and investors to analyze operating performance
and entity valuation. Our management, the investment community and the
banking institutions routinely use EBITDA and Adjusted EBITDA, together with
other measures, to measure our operating performance relative to other Tier 1
automotive suppliers. We also use Segment Adjusted EBITDA as the measure of
earnings to assess the performance of each segment and determine the resources
to be allocated to the segments. EBITDA and Adjusted EBITDA are also key
metrics used in our calculation of incentive compensation. EBITDA and
Adjusted EBITDA should not be construed as income from operations, net income
or cash flow from operating activities as determined under GAAP. Other
companies may calculate EBITDA and Adjusted EBITDA differently.
(b) We define Adjusted earnings per share
to be diluted earnings (loss) per share excluding the impact of restructuring
and acquisition-related costs, debt refinancing and redemption costs, gains or
losses on the derivative associated with our Business Combination with
Dowlais, net interest on debt held in escrow, gains or losses on equity
securities, impairment charges, unrealized foreign exchange gains and losses
on acquired U.S. Private Placement Notes, mark-to-market on nondesignated
foreign exchange derivatives assumed as part of the Business Combination with
Dowlais, gains and losses on the disposal of property, plant and equipment,
amortization of the acquisition intangible asset attributable to our
investment in SDS, net of tax, amortization of intangible assets from
acquisitions, and non-recurring items, including the tax effect thereon. We
believe Adjusted earnings per share is a meaningful measure as it is commonly
utilized by management and investors in assessing ongoing financial
performance that provides improved comparability between periods through the
exclusion of certain items that management believes are not indicative of core
operating performance and which may obscure underlying business results and
trends. Other companies may calculate Adjusted earnings per share differently.
(c) We define free cash flow to be net
cash provided by (used in) operating activities less capital expenditures net
of proceeds from the sale of property, plant and equipment. Adjusted free cash
flow is defined as free cash flow excluding the impact of cash payments for
restructuring and acquisition-related costs and interest income on debt held
in escrow. We believe free cash flow and Adjusted free cash flow are
meaningful measures as they are commonly utilized by management and investors
to assess our ability to generate cash flow from business operations to repay
debt and return capital to our stockholders. Free cash flow and Adjusted free
cash flow are also key metrics used in our calculation of incentive
compensation. Other companies may calculate free cash flow and Adjusted free
cash flow differently.
(d) On February 3, 2026, we completed the
Business Combination and we began consolidating the results of Dowlais on that
date, which are reported in our Driveline and Metal Forming segments for the
three months ended March 31, 2026. Additionally, in the first quarter of
2026, we moved certain plant locations that were previously reported under our
Metal Forming segment to our Driveline segment in order to better align our
product and process technologies. The amounts in the Segment Financial
Information tables for the three months ended March 31, 2025 have been recast
to reflect this reorganization.
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