DCH

Image source: The Motley Fool. Friday, Aug. 7, 2026 at 10 a.m. ET Head of Investor Relations - David Lim Chairman and Chief Executive Officer - David Dauch Executive Vice President and Chief Financial Officer - Chris May Operator: Good morning. My name is Rocco, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Dauch Corporation Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. David Lim, Head of Investor Relations. Please go ahead, Mr. Lim. David Lim: Thank you, Rocco, and good morning, everyone. I'd like to welcome everyone who is joining us on Dauch Corporation's Second Quarter Earnings Call. Now earlier this morning, we released our second quarter of 2026 earnings announcement. You can access this announcement on the Investor Relations page of our website, www.dauch.com, and to the PR Newswire Services. You can also find supplemental slides for this conference call on the Investor page of our website. A replay of this call will be available through August 14. Replay details are in today's press release. Now before we begin, I'd like to remind everyone that the matters discussed in this call may contain comments and forward-looking statements that are subject to risks and uncertainties, which cannot be predicted or quantified and which may cause future activities and results of operations to differ materially from those discussed. For additional information, please reference Slide 2 of our investor presentation or the press release that was issued today. Also, during this call, you may refer to certain non-GAAP financial measures. Information regarding these non-GAAP measures as well as a reconciliation of the non-GAAP measures to GAAP financial information is available in the presentation. With that, let me turn things over to our Chairman and CEO, David Dauch. David Dauch: Thank you, David, and good morning, everyone. Thank you for joining us today to discuss Dow's financial results for the second quarter of 2026. Joining me on the call today is Chris May, our Executive Vice President and Chief Financial Officer. The company's strong second quarter results highlight the continued positive acceleration for the new Dauch Corporation. We are focused on unlocking the full strategic potential of the transformational acquisition as we continue to successfully implement our integration plan to drive value creation and leverage our enhanced size and scale. So far, I'm very pleased with the robust start. As for today's agenda, I'll review the highlights of our second quarter financial performance. Next, I'll touch on our synergy progress, some business updates, commentary about the industry and our guidance. I'll then turn the call over to Chris to cover the details of our financial results, after which we will field any questions that you may have. So let's begin with some of the details. The company's second quarter of 2026 sales were approximately $3 billion, adjusted earnings per share was $0.32 and adjusted free cash flow was approximately $148 million. In the second quarter, North American production was flat year-over-year, Europe was down approximately 1% and global production was also flat. Our quarterly performance reflects continued strength across a number of important customer programs, including BMW's LG platform that underpins the brand's X5 and X7 models. Volvo's SPA crossover utility vehicle platform and GM's large truck program. From a profitability perspective, our adjusted EBITDA in the second quarter was $390 million or 13.2% of sales, driven by mix, business performance, synergies and a solid Dowlais contribution. Chris will provide more details about our overall financial performance during his prepared remarks. On Slide 4, I'd like to share an update on our synergy and value capture progress. We have now been operating for 5 months as a combined company, and we have already realized approximately $70 million of run rate savings to date. We remain on target to deliver more than $100 million in run rate savings by year-end. We have made excellent progress in eliminating duplicative corporate costs, optimizing SG&A and capturing global engineering efficiencies. At the same time, we're advancing initiatives across procurement and operations, which naturally take longer to realize. While significant opportunities remain ahead, I'm proud of the strong progress our team continues to make. As we have previously communicated, we expect to deliver approximately $180 million in run rate savings by the end of year 2 and the full $300 million in run rate savings by the end of year 3. Let me talk about some business updates, which you can see on Slide 5. We want to highlight that our company was named Ford Supplier of the Year Award recipient in the quality category for our outstanding performance dedication and collaboration during the 2025 fiscal year. The recognition reflects a collective effort across our organization to deliver excellence to our customers as they are in the center of everything that we do. We are incredibly proud to receive this award. In addition, in the second quarter, we won numerous awards with major European, Asian and North American customers, supporting not only mainstream vehicle segments but also high-end sports cars and lifestyle offroad-capable vehicles. We are now seeing the strength and the comprehensiveness of our product portfolio. Lastly, we continue to build a strong pipeline of future growth opportunities. Today, we are actively quoted on more than $2 billion of new and incremental business, including capacity uplifts on high-demand programs. Additionally, we are also working to secure next-generation platforms and program extensions. We remain disciplined in pursuing opportunities that align with our strategy and support our long-term profitable growth. Now let's talk about the industry. There are two topics I wanted to discuss with you specifically. First, on the macro environment. In the second quarter, we experienced some incremental costs related to the elevated energy prices, but we did not see any noteworthy impact on our operations nor on our customer schedules. From a high level, we are also not experience -- we did not experience significant mix change, possibly pointing to consumer resiliency, especially here in the U.S. In general, overall production has been stable, and we continue to experience the strength of the North American truck segment. Second, we are actively monitoring the USMCA trade discussions, and we'll react accordingly once discussions are finalized. We understand that the parties are moving into a period of annual review and are currently in active negotiations. This trade relationship is critical to the success of the auto industry and specifically to the North American region. As we have shared in the past, our strategy is to buy and build local in the regions that we serve and we have benefited from this approach, and we'll continue to do so. Now let's talk about our updated full year guidance. We have lifted the low end of our guidance range to take into account our performance through the first half of this year. Additionally, we are managing meaningful launches in the second half of the year. The company now target sales of $10.6 billion to $10.8 billion, adjusted EBITDA range of approximately $1.36 billion to $1.425 billion, adjusted free cash flow of approximately $260 million to $325 million, and our guidance ranges are underpinned by the following production assumptions. North American production at 15.1 million units, Europe at 16.9 million units, China at 31.6 million units and global production at approximately 91.1 million units. As we have shared before, our outlook is based on not only industry production, but also on certain programs that we have meaningful content on. We note that GM is transitioning to its next-generation full-size truck program. We expect the model changeover to begin during the second half of this year. The new truck is very exciting and an important product both for GM as well as for us, and we look forward to successfully supporting our largest customer. Before transitioning to Chris, I want to share with the investment community that we will be hosting a Capital Markets Day on November 17 in New York City. We will provide additional details about the event in the coming months. So please mark your calendars. In summary, we had an excellent second quarter. The integration of Dowlais continues to progress favorably, our synergy achievement is on track, and we're excited about our future and we're built to perform. Now let me turn the call over to our Executive Vice President and Chief Financial Officer, Chris May, for the financial results and details. Thanks. Chris May: Thank you, David, and good morning, everyone. I will cover the financial details of our second quarter 2026 results and our updated guidance with you today. I will also refer to the earnings slide deck as part of my prepared comments. In the second quarter of 2026, our sales were $2.96 billion as compared to $1.54 billion in the second quarter of 2025. Slide 7 shows a walk of second quarter 2025 sales to second quarter 2026 sales. Overall, our sales were flat year-over-year and in line with changes in overall North American production levels. The divestiture of our India commercial vehicle axle business also had a $34 million sales impact in the quarter. This was offset by metal market pass-throughs and FX, which increased sales by approximately $35 million. About 1/3 of this amount was related to FX and was driven by the strengthening of the Brazilian real and the euro. Dowlais contributed $1.45 billion in gross sales for the second quarter. Versus the second quarter of last year, volume mix and other was favorable by $42 million, driven by positive demand for our products that supply BMW and Volvo, which was partially offset by $31 million of lower sales due to the sale of certain businesses. Now let's move on to adjusted EBITDA. For the second quarter of 2026, adjusted EBITDA was $389.6 million and adjusted EBITDA margin was 13.2% versus $202 million and 13.2% last year. You can see a year-over-year walk down of adjusted EBITDA on Slide 8. In the quarter, adjusted EBITDA for legacy Dowlais was lower, primarily reflecting lower volume and mix, the divestiture of our India commercial vehicle axle business and approximately $8 million of EBITDA impact stemming from costs that we incurred during the UAW work stoppage at our Three Rivers, Michigan facility. These headwinds were partially offset by approximately $8 million of continued favorable performance, reflecting our focus on improving our legacy metal forming performance and managing overall costs. Dowlais contributed approximately $180 million of adjusted EBITDA during the quarter were 12.4% of sales. EBITDA benefited from approximately $9 million of volume mix and other as well as $9 million of favorable operational performance. These benefits were partially offset by the sale of businesses that I discussed earlier in my sales commentary. In the second quarter, we realized $15 million in synergy benefits as we eliminated duplicative corporate and SG&A costs and have begun realizing engineering and purchasing efficiencies. As David highlighted, we achieved a $70 million run rate as of today, and we expect this to continue to grow. We have a nice market basket of potential savings that we continue to drive to completion as we target the $100 million plus of run rate savings by year-end. Simply, we are making great progress on our synergy objectives. Let's move on to interest and taxes. Net interest expense was $82.6 million in the second quarter of 2026 compared to $37.5 million in the second quarter of 2025. The year-over-year increase in interest expense primarily reflects the issuance of new and assumed debt in connection with the acquisition. The weighted average interest rate of our outstanding long-term debt was approximately 7.1% at the end of the quarter. As for taxes, in the second quarter of 2026, we recorded an income tax expense of $16 million compared to $28 million in the second quarter of 2025. As we described last quarter, due to the acquisition-related activity this year, our tax rate and impacts remain quite involved in 2026. We expect our adjusted effective tax rate to be approximately 25% to 30% this year. As you may recall, this is somewhat elevated due to the valuation allowances and partial interest deduction limitations in the U.S. As for cash taxes, we continue to expect approximately $160 million to $170 million this year. Taking all these sales and cost drivers into account, our GAAP net income was $1 million, a slight positive earnings per share in the second quarter of 2026 compared to $39.3 million or $0.32 per share in the second quarter of 2025. Adjusted earnings per share, which excludes the impact of items noted in our earnings press release, was $0.32 per share in the second quarter of 2026 compared to adjusted earnings per share of $0.34 for the second quarter of 2025. Let's now move to cash flow and the balance sheet. Net cash provided by operating activities for the second quarter of 2026 was $107.5 million compared to net cash provided by operating activities of $91.9 million in the second quarter of 2025. Capital expenditures that have proceeds from the sale of property, plant and equipment in the second quarter of 2026 were $91.7 million. Reflecting the impact of these activities, our adjusted free cash flow was $148.4 million in the second quarter of 2026 as compared to $48.7 million in the second quarter of 2025. From a debt leverage perspective, we ended the quarter with net debt of approximately $4.1 billion and a net leverage ratio of 2.6x at June 30, 2026. In the near term, we will continue to focus on reducing our outstanding debt and strengthening our balance sheet. During the second quarter, we voluntarily redeemed $125 million of our 6 7/8 notes due in 2028. Subsequent to the end of the quarter, in August, we voluntarily redeemed all of the remaining 6 7/8 notes due in 2028. This also resulted in a principal payment of $125 million. We now have no major debt maturities until 2029. We ended the quarter with total available liquidity of approximately $2.5 million, consisting of available cash and borrowing capacity on our global credit facilities. Let's talk about our updated financial guidance on Slide 6. Our updated targets are as follows: For sales, we tightened our full year guidance range to $10.6 billion to $10.8 billion versus $10.3 billion to $10.8 billion previously, reflecting our solid performance through the first half of 2026 and our expectations for the remainder of the year. This sales target is based on current global production assumptions and certain assumptions for our key programs. For example, we now anticipate GM's full-size pickup truck and SUV production in the range of 1.35 million to 1.4 million units this year. From an EBITDA perspective, we anticipate a range of $1.36 billion to $1.425 billion versus $1.3 billion to $1.425 billion previously. We brought the low end of our range up to reflect the strength of our first half results, operational performance and continued integration execution. We note included in our adjusted EBITDA is the proportionate share of income from our joint venture in China with HASCO, called SDS. We expect our JV share, which is already included in adjusted EBITDA guidance to be in the range of $70 million to $80 million versus $65 million to $75 million previously. We anticipate adjusted free cash flow in the range of $260 million to $325 million from $235 million to $325 million previously. While we do not provide quarterly guidance, we can offer some perspective on the cadence of the remainder of the year. Relative to the first half, in part due to normal seasonality, North American vehicle production is expected to decline approximately 4% sequentially in the second half, while European production is expected to decline approximately 8%, which is often weighted towards the month of August. In addition, GM is scheduled to begin the phase launch of its next-generation full-size pickup trucks in the second half of this year. As is typical with major product transitions, we expect customer production downtime and related volume impacts during the launch period. Currently, we are expecting this temporary impact to our production for this program to begin in September. Our CapEx assumption is unchanged at 4.5% to 5% of sales as we write the organization for important upcoming launches, including the GM large truck program that I just mentioned. From a share count perspective, please continue to use approximately 245 million shares for the remainder quarters of 2026 for modeling purposes. So in conclusion, the company delivered solid first half results and we have benefited from supplying products to some of the strongest vehicle platforms in the industry, plus the strength of our diversified portfolio and a disciplined operating approach. Our operations delivered performance improvements in the areas of metal forming and in the areas that have received restructuring investments. As we move through the second half of the year, our priorities remain clear: continue executing our integration plan delivering our synergy commitments and strengthening the balance sheet. We believe these efforts will further enhance our financial profile and position us to deliver sustainable value creation. As we progress into 2027, we are excited about the potential momentum we are gaining with new program launches such as GM's new full-size pickup, synergy growth and stronger net cash flow performance. So thank you for your time and participation on the call today. I'm going to stop here and turn the call back over to David, so we can start the Q&A. David? David Lim: Thank you, Chris and David. We have reserved some time to take questions. [Operator Instructions] So at this time, please feel free to proceed with any questions you may have. Operator: [Operator Instructions] And today's first question comes from Tom Narayan with RBC. Gautam Narayan: On the free cash flow bridge for H2 '26, I'm seeing $56 million for cash restructuring in H2, based on my math, I think it was $76 million in H1. Good to see that coming down. I know we'll be getting more details in November. But any color on what we could expect to see in that in '27 on cash restructuring? I think it was mostly Dowlais legacy moving plants, things like that. Can we expect that to come down a lot next year? Chris May: Yes. Tom, this is Chris. I'll take that question. Yes, I would expect continued restructuring cash costs this year, as you indicated, and that was, of course, at the midpoint of our current guidance range for that. Those investments that we've been making are a continuation of some of the Dowlais restructuring that has begun over the last year or 2 as well as some, I would call, legacy Dow facilities inside of Europe as well. Those will substantially be complete this year as well. We would expect going into '27 that, that number will reduce meaningfully from its current run rate levels we have here today. We haven't provided a specific number for '27, but we do expect those to drop significantly. Gautam Narayan: Got it. And then for my second question, I don't know if this is apples-to-apples, but I see equity income of $28 million for H1. The China JV was raised to $75 million for the full year. Just taking that math, it could imply that China JV income is higher in H2 versus H1? I know we're hearing some caution from suppliers this earnings season in China in H2. Maybe I'm just doing the wrong math. But just curious what you're seeing from your China JV implications for H2. Chris May: Yes. No, great question. Just I would give you a couple of perspectives on that. Number one, keep in mind also you only have 5 months of that number included in the first half of the year because they were not included as part of our January results. And they are going through some, I would call, new program launches in the back half of 2026 for some programs that they have with some customers so they'll have a little bit of an uptick there. But big picture-wise, think of it you have 5 months versus 6 months. Operator: And our next question today comes from Joe Spak at UBS. Alejandro Nuno: It's Alejandro Nuno on for Joe Spak. You're making good progress on the synergies target. Can you maybe help us better understand the buckets of the synergies you've achieved thus far? Are most of the synergies to date SG&A? Or have you started to achieve some of the synergies on the purchasing and operations front as well? Maybe given how fast you found upside to this year's target, would it be too early for us to expect an update on the potential upside to synergies targets, primarily the operational bucket at the Analyst Day in November? David Dauch: So this is David Dauch. The three buckets that we had outlined before were SG&A, procurement and operations, 30% roughly in the SG&A, 50% of the procurement, 20% of the operations was the base that we are operating from. As I've had in my prepared comments, we're making great progress across the board, but especially in the SG&A and that's to be expected. It's the lower-hanging fruit earlier things that we can get after but we're making meaningful progress there, but we're also making progress on the procurement of the operations. So as we said, we're highly confident that we can deliver the $300 million over the 3-year period of time that we identified. We're confident we can deliver and hit the run rate of over $100 million this year. At the same time, we're obviously looking to see what we can do to potentially increase that in the future, but we're not commenting at this point in time. Alejandro Nuno: Got it. Maybe as a follow-up, can you maybe just provide an update as to what is embedded in the guide for higher labor? Like how many more facilities do you have for UAW negotiations for this year? And if the remainder of those facilities that go up for renegotiations, signed similar contracts to what was signed at Three Rivers, like is that labor inflation embedded in the guide? Any update you can provide there would be helpful. Chris May: In terms of cost perspective, our best estimates of our current labor arrangements are already embedded in our guidance at this point in time. Operator: And our next question today comes from Alex Perry at Bank of America. Alexander Perry: Congrats on a strong quarter. I guess just first, you took the guidance up despite your sort of global production coming down a little bit. What are you seeing that sort of allowed you to do that? And any thoughts on the type of sort of growth versus market you may see next year sort of based on current schedules? Chris May: Yes, this is Chris. I'll take that. Clearly, when we reflected upon our guidance update for this call here today, the strength in the second quarter, we benefited from a very strong sales. We benefited from good operating performance. Those are one of the main drivers of our support an adjustment for our guidance going forward. Obviously, the second half, I talked about in some of my prepared remarks, we do have some reductions in overall production, primarily due to seasonality, but also, of course, for the exciting new GM pickup truck that's going to launch. . And that actually correlates a little bit to your second part of your question, we think about next year, what's coming at us. Obviously, we do many parts of our business move with just overall production. But some of these new critical vehicle programs that are launching, such as GM's full-size truck generally, we see capture share, early stages of those new platforms when they're out in the market. So we're certainly very excited in watching that element very closely. The key new programs will be a driver for some of that growth. Alexander Perry: Really helpful. And then I know you had some initial thoughts on sort of USMCA in your prepared remarks, but I'd love to just hear about sort of the impact in the scenario analysis that you guys are thinking about internally as -- in regards to USMCA? David Dauch: Yes. This is David, Alex. As I said in my prepared remarks, obviously, it's something that we're monitoring closely. We understand the status of where things are at this point in time. But until we get clarity, it's really hard to forecast what that impact will be on the overall business. I mean, our policy, as I said, is always to buy and build local. So we try to minimize the impact as much as we can. Clearly, with the USMCA set up, we'd have to rebalance or reshuffle some things between the U.S. and Mexico, if things go a different direction. But we've got the flexibility to do that and expanded flexibility, especially taking over some U.S. facilities from Dowlais as well as some Mexican facilities from Dowlais. So too early and too premature, I guess, really to comment on the cost implications. But at the same time, we will adjust our footprint and be flexible based on the regional footprint that we have in place. Operator: And our next question today comes from James Mulholland with Deutsche Bank. James Mulholland: Maybe just to piggyback on Alex's question for this year's guide. Nice to see it was raised on the low end, but what would it take realistically for you to reach the high end? Do you need LVP to remain steady where it currently is? Or retooling to go a bit faster, maybe ramp heavy duty comes a little bit stronger in the back half? Just some thoughts about the drivers for the rest of the year, how you would get to that high level. Chris May: Yes. This is Chris. I'll take that. Look, there's obviously many moving pieces to the back half of the year or the full year, as you would know. But first and foremost, clearly, production is one of the top drivers of within some of those ranges, high or low end. So to the extent production is as strong as we expect or stronger for certain platforms that we would supply that would obviously push you towards the higher end. We do provide ranges, for example, on our JV equity income, our ranges on our synergy achievement those clearly, as you're within those ranges, if you're performing at the higher end of those drive you to the higher end of the range. Some of the things we look at in terms of puts and takes, overall, productivity is critical to our success as well. You have a lot of activity in the back half of the year associated with that. But you also have a little bit of, I would say, macro pressure on -- I'll use inflation for things like oil and freight costs. We're sort of counterbalancing some of that productivity to support and work towards mitigate some of those impacts. So those are some of the moving pieces we think about when we're inside of that range. James Mulholland: And then I guess on the $2 billion of active quoting for new and incremental business, can you give us a sense of whether or not the breakdown of quoting there is for new platforms that you're already on or Conquest awards? And then are these products really being quoted more aligned with the legacy Dauch business? Or is it more related to the acquired GKM businesses? David Dauch: This is David. I mean the good news is this balance between the two companies, that being legacy AAM and legacy Dowlais GKN. So that's good news. That's the comprehensive portfolio that we want to have in place, so that's critical there. In regards to the makeup, probably 85% of the business we're quoting today now is ICE and hybrid related, where several years ago, was flipped the other way with electrification. So it plays right in the sweet spot of our portfolio. So we're pleased with that. At the same time, the $2 billion that we identified is just new and incremental business. It includes a little bit of capacity uplifts on the existing platforms, but all the replacement or extension programs are outside of that. Operator: And our next question today comes from Nathan Jones at Stifel. Nathan Jones: I guess also the question on the energy and steel price or still cost increases that we've seen out there, some related to tariffs, some related to the wall. Is that something that impacted the second quarter for you just in terms of EBITDA generation, maybe it's delayed a little bit getting to inventory? And then can you talk about the customer recoveries that you get from that and the timing on those, please? Chris May: This is Chris. I'll take that. From an energy cost perspective, we had, I would say, a relatively minor impact in the second quarter, maybe the tune of a few million dollars. Right now, I would expect that to continue into the second half of the year based on current environment. You indicated sort of a second part of that question related to steel costs. We typically do not buy steel or those type of commodities on a spot purchase, so we're under long-term contracts. So in many cases, we see no variability in the short term for that. To the extent it's driving commodity costs that go into the components we buy, we generally pass those up to our customers mechanically and contractually. And those get passed up every 30, 60, 90 days depending on the customer. And that would be all various inputs that you would see into the products that we buy. But in terms of energy cost recoveries from the customers, those would be separate discussions and we do not have automatic pass-throughs for those, in most cases, some in Europe, but not overall generally not. Nathan Jones: Fair enough. The new GM pickup truck, is there a difference in content for you guys on that platform versus the one that it's replacing? Chris May: Yes, it's relatively similar to the one we're placing, generally same features. There's some little small plus and minuses as they have engineering changes on to support the characteristics of the vehicle. But big picture, you should think it's principally the same. Operator: And our next question today comes from Rajat Gupta with JPMorgan. Rajat Gupta: Congrats on the strong execution. I just want to follow up on the $2 billion quoting activity comment. Obviously, pretty strong progress there. I'm curious, any progress you're seeing on just the cross-sell opportunities between legacy Dauch and Dowlais that you're starting to see. Just curious how those conversations might be going with customers? And should we expect to see any new awards in the near term or wait to hear more in November in our portfolio? David Dauch: Yes. And that was one of the things we're very excited about as far as the cross-selling opportunity here. Again, Dowlais GKN had some very strong relationships with, obviously, the Europeans but especially the Asians. We are obviously very strong with the Detroit Three here, but both companies had active relations with all the global OEMs. It's just a matter who had a stronger relationship. But collectively, we're much stronger across the global OEMs. What we're doing is we're having strategic meetings and reviews with those OEMs so that they understand the comprehensiveness of our portfolio and then find to identify opportunities where we could help them, not only initially right now, but more importantly, mid and long term as they look at their long-range product plans going forward. Part of it is just an educational process with the customers. But we are seeing an uptick in regards to the market basket and new and incremental opportunities. Because of the relationships that the combined business has, and we hope to convert on those as we go forward, and we'll announce it appropriately at the right time. Rajat Gupta: Got it. That's helpful. And just wanted to follow up on CapEx. Is the first half to second half uplift, I mean, pretty significant, like less than $200 million to greater than $300 million implied in the second half. Is that all tied to GM? I'm just curious like about the back -- just the second half weighted nature of that? Or is that just a conservative number out there? Chris May: Yes. Based on the midpoint of our guidance for that range, we are second half weighted in terms of CapEx. We do have program launches GM, of course, is one of them. Some of that has already been spent, but we'll continue to have some more investments associated with that program, but also getting ready for some launches into next year as well. Look, we look to optimize our spend. Look to optimize timing associated with that to the best we can. We'll continue to push on that, but it is second half weighted at this point in time, driven primarily by launch activity. Operator: And our next question today comes from Dan Levy at Barclays. Dan Levy: Wanted to first start with a question on metal forming. So best margin you've had in quite some time. Maybe you could just talk to what happened in metal forming that the margin recovered as much as it did. And then broadly, is the form of metal forming structurally where you need it to be? Or is there stuff that needs to be done within the portfolio to further clean it up? Chris May: Dan, this is Chris. I'll take the first half of that question, talk a little bit about the margin profile. And you can see it is actually over the last couple of quarters, legacy Dow and then transitioning to the combined company has been on a nice steady cadence of improvement. You really had two things happening here. Number one, with the combination with Dowlais brought in, of course, the powdered metal portion of Dowlais into our metal forming operations. They had a slightly higher margin. So you are getting some uplift associated with that when we combine that up. And of course, you pick up an extra month in the second quarter versus the first quarter associated with that. . I think maybe more importantly and twice as exciting, certainly, as it relates to operational wise, we're seeing improvements that we've been discussing over the last well, quite frankly, 3 or 4 quarters in our core metal forming operations continue to take hold. We're not where we need to be yet, but we are seeing continued positive performance also giving uplift in that margin. David Dauch: Yes. Dan, this is David. Again, thank you for acknowledging the margin improvement in the metal form. We've been working really hard both on the legacy AM as well as taking over the legacy GKN type business there. As you -- as part of your question, you talked about the structure and the optimization of the business. We clearly are looking to drive capacity utilization up to certain levels on a global basis. We've got opportunity there. One of the other big opportunities that we have is in-sourcing of product which is a positive because of what they do already on the powder side of the business, but what we also do, meaning legacy AM on the forging side of the business. And then clearly, with all the tariff discussions that are ongoing right now, there's a tremendous inquiry from a lot of global OEMs as well as other tiered for reshoring or localization to the individual continents around the world. So we see tremendous upside opportunity here. At the same time, we'll look to optimize the portfolio appropriately where it makes business sense. But we do that with all of our business, and we always maintain optionality on that business going forward. Dan Levy: Okay. Second is sort of similar question, but on Dowlais. So you've now had it for 6 months. And so you've had a deeper look at the business. And presumably, you've now been through the facilities have a better sense of the resource usage and allocation. How much more work or what type of work needs to be done on optimization, rationalization, whether it's footprint, whether it's resources? How close is that to the business that you expected versus what further items need to be done that maybe are different from what you originally expected? David Dauch: Yes. On the positive side of things, Dowlais was already actively involved on the auto side of the business with some major restructuring that they had done in the U.S. as well as ongoing in Europe and that you're seeing some of those restructuring costs coming through in the financial performance. And again, as we said, hopefully, in the lower end of that as we go forward here based on the hard work that was done before we acquired it, but the work that we continue to do -- to execute those plans. As Chris said, we have some of our own legacy AM plans that we're optimizing that's coming through that as well. Overall, their facilities are in decent shape. They need some upgrading to the legacy AM standards or Dauch standards. So we'll deal with that appropriately. Clearly, we're managing very closely installed capacity and capability on that capacity and evaluating the capability of the machines and the workforce and the availability of labor in the given areas. Probably the biggest area of improvement that we still see is the implementation of the Dauch operating system. They will benefit greatly from that from a discipline from a structure standpoint. That will take some time to get implemented over the next couple of years, but also will result in productivity savings and synergy savings as we go forward. But overall, I mean, Dowlais had and has a very strong innovation background. They have a solid manufacturing background. They just need to be optimized from a capacity utilization, facility utilization and most importantly, the implementation of the operating system. So we see upside potential there. Dan Levy: That productivity could be incremental to the synergy targets that you've laid out? David Dauch: Well, right now, I mean, it's kind of a mixed bag because we got the base valet productivity commitments. We've got the legacy AM productivity commitments, and we got synergies on top of it. They all come out of the same productivity bucket. So -- but we're hopeful that we can see some upside in the future. But right now, we're not adjusting our commitment from a synergistic standpoint. Operator: And our next question comes from Hamed Khorsand with BWS. Hamed Khorsand: I just want to ask you if you're seeing this stable production from industry and also from your end, how are you able to manage the business to maximize contribution margin? Chris May: Well, first of all, as it relates to contribution margin, one of the best ways to support that. It's one of the first best ways to support that is a stable production environment. You may recall the industry over the last maybe 2 or 3 years ago that had unstable production schedules, unstable macro, there were semiconductor challenges, et cetera, caused us to be highly inefficient. So once the production environment stabilizes like we've been experiencing this year, for example, really allows you then to hone in on maximizing throughput, maximizing efficiency, maximizing productivity. And that is single most best environment we get asked for to maximize our contribution margin on the products that we build. Hamed Khorsand: And are you able to do that now? Chris May: Yes. We're doing it right now. I mean, overall, production environment has been relatively stable, correct. The combined company has a relatively consistent variable profit or contribution margin anywhere between 25% to 35% depending on the product. And we've been able to maintain that on an ongoing basis here. Operator: And our next question today comes from Vanessa Jeffriess at Jefferies. Vanessa Jeffriess: Congratulations on the results. So you've made excellent progress on synergies, but I know you've spoken about the purchasing piece maybe being a little bit more difficult given the backdrop, which we're clearly seeing persist. So is there any risk the purchasing synergies get pushed out a bit more? Or do you have a buffer there either from SG&A or how conservative you've been on the targets? And then secondly, I know you've done plenty of travel this year. So maybe if you could give us an update on how you're thinking about consolidating the Dowlais footprint. And we definitely continue to see European names talk more and more about what they can move to Hungary. And obviously, Dowlais made a significant investment there. So maybe any thoughts on what you can consolidate there to improve profitability in Europe. David Dauch: Okay. This is David. Again, that's what we said earlier, we're making tremendous progress in regards to synergies, I mean we're already delivering run rate synergy of $70 million for owning it for 2 quarters. We're on track to deliver the $100 million heavily weighted towards the SG&A. But like I said, pursing and operations are contributing to that. We fully expected that we would need the 3 years to achieve all of our purchasing objectives as well as our operational objectives, largely because of the market that we're in today, especially on the direct side, is going to take some time. So I'd see some of the direct being more back weighted, more '27, '28 type things, but we can offset some of that with stronger performance on some of the indirect and freight and logistics and in-sourcing opportunities as well as some of the SG&A things, as I already mentioned to you. From an operational standpoint, yes, GKN had built a plant in Hungary and moved some work to Hungary. We're evaluating the footprint across Europe on a combined portfolio now. We're looking to optimize, as I said, facility equipment and people utilization. Certainly, Hungary will come into play as we evaluate that going forward here. But there was clearly an effort by to move from some of the Western countries to some of the eastern countries. We're just assessing what that is, while at the same time, balancing appropriate labor agreements that we have in place with the unions in those given areas. It's not just limited to Europe, we're doing that globally around the world. Our job is to make sure we're driving full utilization of our resources, and that takes some time to get that done, but we're heavily focused on that right now. And we'll continue to be. Operator: And our next question today comes from Itay Michaeli with TD Cowen. Itay Michaeli: Just want to go back to the $2 billion of quoting. Two questions there. One, any way to think about potential win rates there? I think in the past, we typically talked about kind of 30% for legacy Dow? And then as you kind of look at these opportunities, is that broadly consistent with just how you're thinking about CapEx intensity for the company going forward as these opportunities emerge? David Dauch: Yes. I'd say -- Itay, this is David. From a win rate standpoint, you should continue to focus around that 30% level. Obviously, Dale has a leading market share position with respect to side shaft, so it might be a little bit higher with respect to that side of things. But the balance of things should be right around that 30% side. And just on the CapEx side, we've guided 4.5% to 5.5% of sales, and we can manage our business within that, not only today, but also going forward into the future. I don't know, Chris, anything else you might want to add? Chris May: As it relates to capital intensity, as you know, Itay, bigger programs are clear bigger capital. But generally speaking, we price for those accordingly. We have business case hurdles that we need to meet to do that. And our goal, I think, as we've shared over the last couple of years is to try to maintain that CapEx at 5% or lower, even acknowledging some of these new business opportunities. That said, we'll look at each one as it comes our way and do the appropriate financial analytics on those cases. and go from there. Itay Michaeli: Maybe a quick kind of housekeeping question. Any kind of high-level sense of just kind of regional revenue performance for the combined company in the quarter now that you have a little bit more diversification. Just kind of curious how the regional revenue performed? Chris May: Yes. I would say the regional revenue has performed very consistent with what you see at the macro level for each of the regions that we support. And primarily, as you know, the bulk of our business comes out of North America, about 60% and Europe of, call it, 25%. As I mentioned in my prepared remarks, overall, North America was down, I think, 10% inside the quarter versus the prior year. And we see very similar in terms of our regional performance there, same with Europe as well. Operator: And our next question today comes from Jake Scholl with BNP. Thomas Scholl: Could you just give us an idea of what launch costs may some of the one-timers look like in the second half? Just if we can get to kind of just converge to a more normalized run rate to use this jumping off like '27? Chris May: Yes. Jake, this is Chris. I would say, while we do have a meaningful launch, especially with the General Motors light-duty pickup truck. We've been in a series of launches here last year, this year, I would expect into next year. I don't see at this point in time any period that has overweight launch costs versus the other. So while we're incurring them, we'll continue to incur them. We did last year. We will continue to incur them next year as we're launching a wide variety of programs. You may recall, we at least from outsized programs as legacy Dauch. We launched the Ram about 2 years ago. That was a big program. We had some heavy-duty truck activity here earlier this year. You have light-duty back half of this year. We have a whole host of other programs now with the Dowlais products that we have inside the company, which is great, a lot of activity from that perspective. So I would just think of it at this point in time relative I wouldn't spike one quarter out or one year out versus the other at this point in time. Thomas Scholl: That's helpful. And then you guys are generating strong cash flow this year. It looks like it stepped up pretty meaningfully next year. So -- how should we think about when you guys will be able to serve returning some of that to shareholders? Chris May: Yes. We've been very public about our capital allocation approach, especially as it relates to when we made the acquisition announcement earlier this year. Clearly, as you know, we took on some debt to do this acquisition, but maintain still a healthy leverage profile. But our objective was to continue to strengthen our balance sheet as we go forward. And our primary use of capital allocation in the near term would be to continue to reduce our debt until we're around 2.5x levered or lower. And then once we sort of cross that threshold on a stable basis, we will and look to open up the playbook to, I would say, additional capital allocation across the spectrum, including shareholder-friendly activity. Operator: And our next question today comes from Doug Karson at Bank of America. Douglas Karson: I guess two or three topics. So first, great job on taking out to 2028, if my math serves me right, you took out $250 million in May and August combined and then started in October. So $400 million of debt came out just in the last year or so, which is great. Have you had a chance to circle up with the agencies? I will, myself, but -- there's some kind of scale like negative outlook out there at S&P? And have the rating agencies kind of absorb the debt reduction yet? Chris May: Yes. Of course, obviously, they watch us very closely. As you know, we are in contact with them periodically to provide them updates that is one of their top items that they monitor, but also our cash flow performance as well as our ability to generate synergies on a go-forward basis is also critical to at least through their eyes how we continue to -- I'd say, move up the ratings change, if you will. So we continue to keep them well up to speed on our position and all the activities doing but meeting that commitment of paying down debt that we said we would do, and you see us doing it as a key piece of the success with that relationship and their view of us. Douglas Karson: Yes. I'll reinforce that on my side. The Silverado share you're going to hit showrooms, I think, in December. I think Fort Wayne and Flint have already planned like a bunch of retooling already. How do you see the production cadence from GM? I guess, on target I'm looking at IHS production it's right in front of me right now, and it definitely wobbles a little bit kind of at the beginning of 2027. Are you prepared to kind of navigate the changes in production need from GM like you already set up for it? Chris May: Well, yes, of course, we're absolutely prepared to accommodate their schedules as well as supporting them through their launches. As I mentioned in my prepared remarks, we expect some of that downtime, especially in the light-duty side, to begin impacting us here in September, which were prepared and is part of our thought process here from that standpoint. Then they'll go into some rolling launches in the future years. And we'll, of course, support them as needed. No issue. Douglas Karson: A great product. And then my final last one is the $2 billion of business you're trying to win. Do you have a sense of how much of that is like EV business versus ICE business? And it may not even matter, but I'm just kind of curious of like the next generation of what you're looking at in that $2 billion, if you just a share that? David Dauch: Yes, Doug, this is David. It's really small over the last 18 months from what was 85% electrification to is now 85% ICE and hybrid with a smaller level of electrification. So it's right in the core sweet spot of both the legacy AM and the legacy Dowlais product portfolio. At the same time, we still continue to see some electrification opportunities, especially outside of North America. But this is right in our core wheelhouse and we expect to convert. Douglas Karson: That's great. Last final comment for me. Thanks for sticking to your guns on getting the balance sheet right, and then share in the weld equity when you're stable and despite paying down $400 million of debt, I mean, your stock is up 18% today. So both sides could win. I think a strong balance sheet is going to be really helpful in the future. David Dauch: Thanks for your comments. Appreciate it. Operator: And our next question is a follow-up from Tom Narayan with RBC. Gautam Narayan: David, I just want to follow up on something you were talking about earlier with the -- I guess, the USMCA, if there's -- I know there's talk about this 50% U.S. contenting and the stuff you guys could do now with some of the Dowlais assets in the U.S. Just trying to understand the scale of this and maybe this would never happen, but like if the Ram heavy duty were to be onshore, let's say, is that something like at that scale, you could potentially support? I don't know, is there a risk that they would in-source let's say, there? I mean, what is the scale of the on-shoring you guys would do? And would this be something that the OEMs would just compensate you guys for? David Dauch: Yes. I was going to say, right now, it would all be speculation on everyone's behalf. Clearly, there's a lot of dialogue about increase in the U.S. content from the level that it's at today to what they want it to be in the future. The Trump administration clearly has put a lot of pressure not only on the Detroit Three, but also on the global OEMs to do more here in the U.S. and you're seeing the sizable level of investment that's being committed here into the U.S. market. Like I said, that bodes well for us in regards to new and incremental business opportunities for us. But to your question about potential moving work, let's say, from Mexico to the U.S., that's going to be on a case-by-case basis with customers. We'll have to discuss that with them on a case-by-case basis. Highly unlikely that you'll move something like the Ram in my opinion, the level of investment that's been sunk and where things are at, it doesn't mean that they couldn't build a certain capacity in the U.S. that they wanted to. But they've got a sizable investment as such GM and as other OEMs in Mexico. And those OEMs are going to want to leverage that installed capacity as much as they can. I mean it's billions of dollars to pick up and move in an assembly plant. So we just have to take this, like I said, on a case-by-case basis, run business cases and then share the impact with the customers, and then they'll have to make a bigger decision as to what they want to do to address the bigger issue between the OEMs and the government and the expectations that way. David Lim: And we thank all of you who have participated on this call and appreciate your interest in Dauch. We certainly look forward to talking with you in the future. Thank you. Operator: Thank you. That does conclude today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day. Before you buy stock in Dauch, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dauch wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,943!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,382,819!* Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 216% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 14, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Dauch (DCH) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Dauch (DCH) just released second quarter 2026 results that combined higher sales with much lower net income, along with updated full year guidance that still points to a loss for the year. See our latest analysis for Dauch. The latest earnings and guidance appear to have shifted sentiment around Dauch, with the share price at $6.35 and a 1 month share price return of 23.78% after a softer 90 day share price return that fell 5.08%. Over the longer term, total shareholder return has been mixed, with a 1 year total shareholder return of 20.27% but a 5 year total shareholder return that declined 32.16%. Recent momentum is therefore building from a relatively weak multi year base. If Dauch’s rebound has caught your eye, this can be a useful moment to broaden your watchlist and look at 37 power grid technology and infrastructure stocks Dauch has already staged a sharp bounce, yet the stock still trades below analyst targets and the company is guiding to a full year loss. Has the recent move used up most of the upside, or is there more potential remaining? Dauch’s most followed narrative anchors on a fair value of $14.90 versus the latest close at $6.35. This frames a wide valuation gap and puts the spotlight on earnings power and integration benefits. Read the complete narrative. Want to see what sits behind that earnings ambition for Dauch? The narrative focuses on faster growth, higher margins and a richer future earnings multiple. Curious which specific revenue and profit milestones need to line up to justify that fair value. Result: Fair Value of $14.90 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Dauch’s narrative can shift quickly if Dowlais integration stumbles, or if debt and interest costs restrict spending on electrification and new programs. Find out about the key risks to this Dauch narrative. If the mix of risks and rewards around Dauch feels finely balanced, now is a good time to examine the numbers yourself. Move quickly to shape your own view with 3 key rewards and 1 important warning sign If Dauch has sharpened your focus, now is the moment to widen your opportunity set and line up a few more stocks that could earn a place on your watchlist. Start with resilience and target companies that pair dependable earnings with stronger balance sheets by checking the solid balance sheet and fundamentals stocks screener (48 results). Hunt for mispriced potential and review the 52 high quality undervalued stocks so you do not miss stocks that trade below what their fundamentals may justify. Prioritise consistency and look through the 83 resilient stocks with low risk scores before the next wave of investors starts focusing on steadier return profiles. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include DCH. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in American Axle & Manufacturing Holdings, Inc.? Here are five stocks we like better. Strong quarterly performance: Second-quarter sales reached $2.96 billion following the Dowlais acquisition, while adjusted EBITDA was $389.6 million with a 13.2% margin. Acquisition-related synergies contributed $15 million during the quarter, with approximately $70 million in annualized savings achieved to date. Improved full-year outlook and cash flow: American Axle raised the low end of its 2026 sales, adjusted EBITDA and free-cash-flow guidance, citing operational execution and integration progress. Adjusted free cash flow rose to $148.4 million, and the company is prioritizing debt reduction after ending June with $4.1 billion in net debt. Integration and market risks remain: Management expects vehicle production to decline in North America and Europe during the second half and anticipates temporary effects from GM’s next-generation truck launch. The company is quoting more than $2 billion of new business, mostly for internal-combustion and hybrid programs, while monitoring potential USMCA trade changes. American Axle Manufacturing Stock is an Automotive Recovery and Electrification Play American Axle & Manufacturing (NYSE:DCH) reported second-quarter 2026 sales of approximately $3 billion, adjusted EBITDA of $389.6 million and adjusted free cash flow of $148.4 million, as the company continued integrating Dowlais and raised the low end of its full-year outlook. Chairman and CEO David Dauch said the quarter reflected “continued positive acceleration” for the combined company, which has operated for five months following the transaction. He pointed to strength on several customer programs, including BMW’s CLAR platform for the X5 and X7, Volvo’s SPA crossover platform and General Motors’ large-truck program. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Second-quarter sales totaled $2.96 billion, compared with $1.54 billion in the prior-year period. Chief Financial Officer Chris May said sales were broadly flat year over year on an underlying basis and tracked overall North American production, which was nearly unchanged from the prior year. The acquisition contributed $1.45 billion of gross sales during the quarter. Adjusted earnings per share were $0.32, compared with $0.34 a year earlier. GAAP net income was $1 million, versus $39.3 million in the second quarter of 2025, while net interest expense rose to $82.6 million from $37.5 million, primarily because of debt issued and assumed in connection with the acquisition. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Adjusted EBITDA was $389.6 million, or 13.2% of sales, matching the adjusted EBITDA margin recorded a year earlier. Dauch said profitability benefited from product mix, business performance, synergies and the contribution from Dowlais. The company realized $15 million of synergy benefits during the quarter, primarily through eliminating duplicative corporate and selling, general and administrative costs, while also beginning to capture engineering and purchasing efficiencies. Management said it has achieved approximately $70 million in annualized run-rate savings since the combination and remains on track for more than $100 million by year-end. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High The company continues to target approximately $180 million in run-rate savings by the end of the second year and $300 million by the end of the third year. Dauch said early savings have been weighted toward SG&A and engineering, while procurement and operational initiatives are progressing but will take longer to realize. In the legacy business, adjusted EBITDA was affected by lower volume and mix, the divestiture of the India commercial-vehicle axle business, and roughly $8 million of costs associated with a UAW work stoppage at the Three Rivers, Michigan facility. Those pressures were partly offset by improved metal-forming performance and cost management. May said the company’s metal-forming margin improvement reflected both the addition of higher-margin powdered-metal operations from Dowlais and continued operating improvements in the core metal-forming business. Management said additional work remains to improve capacity utilization and implement the company’s operating system across the acquired operations. Cash from operations totaled $107.5 million in the quarter, compared with $91.9 million a year earlier. Adjusted free cash flow increased to $148.4 million from $48.7 million. The company ended June with about $4.1 billion in net debt, a 2.6-times net leverage ratio and approximately $2.5 billion of available liquidity. During the quarter, the company voluntarily redeemed $125 million of its 6.875% notes due 2028, and it redeemed the remaining notes after quarter-end in August. May said the actions leave the company with no major debt maturities until 2029. Management said reducing debt and strengthening the balance sheet remain its near-term capital-allocation priorities. The company raised the low end of its full-year guidance, now forecasting: Sales of $10.6 billion to $10.8 billion, compared with prior guidance of $10.3 billion to $10.8 billion. Adjusted EBITDA of $1.36 billion to $1.425 billion, compared with $1.3 billion to $1.425 billion previously. Adjusted free cash flow of $260 million to $325 million, compared with $235 million to $325 million previously. Management said the updated outlook reflects first-half performance, operational execution and integration progress. It expects North American production to decline about 4% sequentially in the second half and European production to decline about 8%, in part due to normal seasonal patterns. GM is expected to begin a phased launch of its next-generation full-size pickup trucks during the second half, with temporary production effects anticipated beginning in September. May said the company’s content on the new GM truck is “principally the same” as on the platform it replaces. Dauch said the company is actively quoting more than $2 billion of new and incremental business, including capacity increases on high-demand programs. About 85% of that quoting activity is related to internal-combustion-engine and hybrid programs, he said, a reversal from several years ago when electrification represented a larger share of opportunities. Management cited an expected win rate of roughly 30%, while noting its sideshaft position could support a higher rate in some areas. The company is also monitoring U.S.-Mexico-Canada Agreement trade discussions. Dauch said its strategy of buying and building locally provides flexibility, including through the expanded U.S. and Mexican footprint gained from Dowlais, though he said it was too early to quantify potential cost implications or operational changes. Management plans to host a Capital Markets Day on Nov. 17 in New York City. American Axle & Manufacturing is a U.S.-based designer, engineer and manufacturer of driveline and drivetrain systems and components for the automotive and light- and heavy-vehicle markets. The company produces a range of mechanical and electromechanical products including axles, driveshafts, differential systems, halfshafts, transmission components, and related sealing and suspension parts. Its product portfolio serves passenger cars, light trucks, commercial vehicles and off-highway applications. Beyond component manufacturing, the company provides integrated engineering services such as product development, testing and system integration to help vehicle manufacturers meet performance, weight and fuel-economy targets. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "American Axle & Manufacturing Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Release Date: August 07, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Strong second quarter results with sales of approximately $3 billion and adjusted EPS of $0.32, reflecting continued positive acceleration. Synergy realization is on track, with $70 million in run-rate savings achieved to date and a target of over $100 million by year-end. Adjusted EBITA margin remained solid at 13.2%, driven by favorable mix, business performance, and synergies. Adjusted free cash flow improved significantly to $148.4 million in Q2, up from $48.7 million in the prior year. Raised full-year guidance for sales, adjusted EBITA, and adjusted free cash flow, reflecting strong first-half execution. Won multiple awards, including Ford Supplier of the Year, and built a pipeline of over $2 billion in new business opportunities. Proactively reduced debt by redeeming $250 million of 2028 notes, with no major maturities until 2029. Adjusted EPS declined year-over-year to $0.32 from $0.34, impacted by higher interest expense and acquisition-related costs. North American and European production remained flat or slightly down, limiting volume growth. Incurred incremental costs from elevated energy prices and a UAW work stoppage at the Three Rivers facility, impacting EBITDA by approximately $8 million. GM's transition to next-generation full-size trucks is expected to cause production downtime and volume impacts in the second half. Higher interest expense due to acquisition debt increased net interest costs to $82.6 million, up from $37.5 million. Adjusted effective tax rate is elevated at 25-30% due to valuation allowances and interest deduction limitations. Restructuring costs are expected to continue, though they should decline meaningfully in 2027. Warning! GuruFocus has detected 9 Warning Signs with DCH. Is DCH fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more color on the expected cash restructuring costs for 2027, and should we expect them to decrease significantly next year? A: Chris May (CFO): We expect continued restructuring cash costs this year as part of our guidance, primarily from the continuation of Dali restructuring and some legacy facilities in Europe. These will substantially be complete this year, and we expect the number to reduce meaningfully in 2027, though we haven't provided a specific number yet. Q: Regarding the China JV (SDS), the equity income seems to imply higher income in H2 versus H1. What are you seeing from the JV, given some supplier caution in China? A: Chris May (CFO): The first half only includes 5 months of the JV's income since the acquisition closed in January. Additionally, the JV has new program launches in the back half of 2026, which will provide an uptick. Big picture, think of it as 5 months versus 6 months of contribution. Q: You're making good progress on synergies. Can you break down the buckets achieved so far, and is it too early to expect an update on potential upside to the targets at the Analyst Day? A: David Dow (CEO): The three buckets are SG&A (30%), procurement (50%), and operations (20%). We're making great progress across the board, especially in SG&A, which is the lower-hanging fruit. We're highly confident in delivering the $300 million over three years and over $100 million run rate this year. We're looking at potential upside but aren't commenting on that yet. Q: What is embedded in the guidance for higher labor costs, and how many more facilities have UAW negotiations this year? A: Chris May (CFO): Our best estimates of current labor arrangements are already embedded in our guidance at this point in time. Q: You raised guidance despite global production coming down. What allowed you to do that, and what are your thoughts on next year based on current schedules? A: Chris May (CFO): The strength in Q2, with strong sales and good operating performance, drove the guidance adjustment. For the second half, we have production reductions due to seasonality and the GM pickup launch. Looking to next year, new critical programs like GM's full-size truck generally see share capture early in their lifecycle, which we're excited about. Q: Can you provide scenario analysis on the impact of USMCA trade discussions? A: David Dow (CEO): We're monitoring closely, but it's hard to forecast until we get clarity. Our policy is to buy and build local to minimize impact. If things change, we have flexibility to rebalance between the US and Mexico, especially with the expanded footprint from Dali. It's too early to comment on cost implications, but we'll adjust our footprint as needed. Q: What would it take to reach the high end of the guidance range for this year? A: Chris May (CFO): Production is a top driver. If production is stronger than expected for certain platforms, that would push us to the higher end. Performance within our ranges on JV equity income and synergies also matters. Productivity is critical, but we're also managing macro pressures like oil and freight costs. Q: Can you give a sense of the breakdown of the $2 billion in active quotingis it for new platforms, conquest awards, and is it more aligned with legacy Dow or the acquired GKN businesses? A: David Dow (CEO): The quoting is balanced between legacy Dow and legacy Dali/GKN, which is great for our comprehensive portfolio. About 85% of the business we're quoting is ICE and hybrid related, which plays into our sweet spot. The $2 billion is just new and incremental business, including capacity uplifts, but excludes replacement or extension programs. Q: Did energy and steel cost increases impact Q2 EBITDA, and can you discuss cost recoveries and timing? A: Chris May (CFO): Energy costs had a relatively minor impact in Q2, a few million dollars, and we expect that to continue into H2. For steel, we're under long-term contracts, so we see no short-term variability. Commodity costs in components are generally passed through to customers mechanically every 30-90 days. Energy cost recoveries are separate discussions and don't have automatic pass-throughs in most cases. Q: Is there a difference in content for you on the new GM pickup truck versus the one it's replacing? A: David Dow (CEO): It's relatively similar to the one we're replacing. There are some small engineering changes to support vehicle characteristics, but big picture, you should think of it as principally the same content. Q: Are you seeing progress on cross-sell opportunities between legacy Dow and Dali, and should we expect new awards soon? A: David Dow (CEO): We're very excited about cross-selling. Dali had strong relationships with European and Asian OEMs, while we're strong with the Detroit 3. We're having strategic meetings with global OEMs to show our comprehensive portfolio. We're seeing an uptick in new and incremental opportunities due to these combined relationships and hope to convert on them, announcing at the right time. Q: The CapEx is significantly second-half weighted. Is that all tied to GM, and is it conservative? A: Chris May (CFO): Based on the midpoint of guidance, we are second-half weighted in CapEx. We have program launches, including GM, and some investments for launches next year. We look to optimize timing, but it's driven primarily by launch activity. Q: Metal forming had its best margin in some time. What drove the recovery, and is it structurally where it needs to be? A: Chris May (CFO): The combination with Dali brought in higher-margin powdered metal operations, providing uplift. More importantly, we're seeing improvements in our core metal forming operations take hold over the last 3-4 quarters. We're not where we need to be yet, but performance is improving. David Dow (CEO): We're driving capacity utilization up and seeing insourcing opportunities. With tariff discussions, there's tremendous inquiry for reshoring and localization, providing upside. We For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Delivers Strong Performance and Operating Cash Flow DETROIT, Aug. 7, 2026 /PRNewswire/ -- Dauch Corporation ("Dauch") (NYSE: DCH; LSE: DCH) today reported its financial results for the second quarter 2026. Second Quarter 2026 Results Sales of $2.96 billion Net income attributable to Dauch of $1.0 million Adjusted EBITDA of $389.6 million, or 13.2% of sales Diluted earnings per share of $0.00; Adjusted earnings per share of $0.32 Net cash provided by operating activities of $107.5 million; Adjusted free cash flow of $148.4 million "The company's strong second-quarter results highlight the continued positive acceleration for the new Dauch Corporation," said Chairman and Chief Executive Officer David C. Dauch. "We are focused on unlocking the full strategic potential of the transformational acquisition we completed earlier in the year." 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 second quarter of 2026 were $2.96 billion as compared to $1.54 billion in the second quarter of 2025. The company's net income attributable to Dauch in the second quarter of 2026 was $1.0 million, a nominal amount per share and a nominal margin on sales, as compared to net income of $39.3 million, or $0.32 per share and 2.6% of sales, in the second quarter of 2025. Adjusted earnings per share in the second quarter of 2026 was $0.32 compared to Adjusted earnings per share of $0.34 in the second quarter of 2025. In the second quarter of 2026, Adjusted EBITDA was $389.6 million, or 13.2% of sales, as compared to $202.1 million, or 13.2% of sales, in the second quarter of 2025. The company's net cash provided by operating activities for the second quarter of 2026 was $107.5 million as compared to $91.9 million for the second quarter of 2025. The company's Adjusted free cash flow for the second quarter of 2026 was $148.4 million as compared to $48.7 million for the second quarter of 2025. Dauch's Updated 2026 Financial OutlookDauch'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 $10.6 - $10.8 billion vs. $10.3 - $10.8 billion previously. Adjusted EBITDA in the range of $1.36 - $1.425 billion vs. $1.30 - $1.425 billion previously. Adjusted EBITDA includes synergy benefits of $60 - $75 million (vs $50 - $75 million previously), 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 $70 - $80 million vs $65 - $75 million previously. Adjusted free cash flow in the range of $260 - $325 million vs. $235 - $325 million previously. Capital expenditures in the range of 4.5% to 5% of sales. Restructuring cash payments of $115 - $150 million. Synergy implementation cash payments of $95 - $110 million. These targets are based on the following assumptions for 2026: Production outlook: 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. Second Quarter 2026 Conference Call Information A conference call to review Dauch's second 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 953-5491. A replay will be available one hour after the call is completed until August 14, 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 984-1988. 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 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, including net interest on debt held in escrow. Company DescriptionDauch 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 StatementsIn 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 ContactDavid H. Lim Head of Investor Relations (313) 758-2006 [email protected] Media Contact Christopher M. SonVice President, Marketing & Communications(313) [email protected] Or visit the Dauch website at www.dauch.com. View original content to download multimedia:https://www.prnewswire.com/news-releases/dauch-reports-second-quarter-2026-financial-results-302845633.html

Dauch (DCH) came out with quarterly earnings of $0.32 per share, beating the Zacks Consensus Estimate of $0.14 per share. This compares to earnings of $0.21 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +128.57%. A quarter ago, it was expected that this maker of auto parts would post a loss of $0.04 per share when it actually produced earnings of $0.34, delivering a surprise of +950%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Dauch, which belongs to the Zacks Automotive - Original Equipment industry, posted revenues of $2.96 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 6.07%. This compares to year-ago revenues of $1.54 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Dauch shares have lost about 11.5% since the beginning of the year versus the S&P 500's gain of 12.6%. While Dauch has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Dauch was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.22 on $2.77 billion in revenues for the coming quarter and $0.78 on $10.54 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Original Equipment is currently in the bottom 31% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Workhorse Group (WKHS), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 13. This truck and drone manufacturer is expected to post quarterly loss of $1.23 per share in its upcoming report, which represents a year-over-year change of +93.9%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Workhorse Group's revenues are expected to be $9 million, up 58.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dauch Corporation (DCH) : Free Stock Analysis Report Workhorse Group, Inc. (WKHS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

LCI (LCII) came out with quarterly earnings of $2.7 per share, beating the Zacks Consensus Estimate of $2.63 per share. This compares to earnings of $2.39 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +2.66%. A quarter ago, it was expected that this recreational vehicle parts supplier would post earnings of $2.22 per share when it actually produced earnings of $2.59, delivering a surprise of +16.67%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. LCI, which belongs to the Zacks Automotive - Original Equipment industry, posted revenues of $968.68 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 14.21%. This compares to year-ago revenues of $1.11 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. LCI shares have lost about 11.8% since the beginning of the year versus the S&P 500's gain of 13%. While LCI has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for LCI was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $2.30 on $1.06 billion in revenues for the coming quarter and $8.71 on $4.25 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Original Equipment is currently in the bottom 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Dauch (DCH), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 7. This maker of auto parts is expected to post quarterly earnings of $0.14 per share in its upcoming report, which represents a year-over-year change of -33.3%. The consensus EPS estimate for the quarter has been revised 17.9% higher over the last 30 days to the current level. Dauch's revenues are expected to be $2.79 billion, up 81.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report LCI Industries (LCII) : Free Stock Analysis Report Dauch Corporation (DCH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The market expects Dauch (DCH) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended June 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on August 7, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This maker of auto parts is expected to post quarterly earnings of $0.14 per share in its upcoming report, which represents a year-over-year change of -33.3%. Revenues are expected to be $2.79 billion, up 81.4% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 17.89% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Dauch, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -10.15%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination makes it difficult to conclusively predict that Dauch will beat the consensus EPS estimate. While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Dauch would post a loss of$0.04 per share when it actually produced earnings of $0.34, delivering a surprise of +950.00%. Over the last four quarters, the company has beaten consensus EPS estimates four times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Dauch doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. BorgWarner (BWA), another stock in the Zacks Automotive - Original Equipment industry, is expected to report earnings per share of $1.26 for the quarter ended June 2026. This estimate points to a year-over-year change of +4.1%. Revenues for the quarter are expected to be $3.58 billion, down 1.5% from the year-ago quarter. Over the last 30 days, the consensus EPS estimate for BorgWarner has been revised 0.4% down to the current level. Nevertheless, the company now has an Earnings ESP of +0.62%, reflecting a higher Most Accurate Estimate. When combined with a Zacks Rank of #4 (Sell), this Earnings ESP makes it difficult to conclusively predict that BorgWarner will beat the consensus EPS estimate. The company beat consensus EPS estimates in each of the trailing four quarters. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dauch Corporation (DCH) : Free Stock Analysis Report BorgWarner Inc. (BWA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research