Financial Analysis

10. COMMITMENTS AND CONTINGENCIES PURCHASE COMMITMENTS Obligated purchase commitments for capital expenditures and related project expenses were approximately $160.8 million at December 31, 2025 and $174.9 million at December 31, 2024. Of the approximately $160.8 million of purchase commitments at December 31, 2025, $144.7 million is expected to be paid in 2026 and $16.1 million is expected to be paid in 2027 and thereafter. LEGAL PROCEEDINGS We are involved in, or potentially subject to, various legal proceedings or claims incidental to our business. These include, but are not limited to, matters arising out of product warranties, contractual matters, and environmental obligations. Although the outcome of these matters cannot be predicted with certainty, at this time we do not believe that any of these matters, individually or in the aggregate, will have a material adverse effect on our results of operations, financial condition, or cash flows. We file U.S. federal, state and local income tax returns, as well as non-U.S. income tax returns in jurisdictions throughout the world. We are also subject to examinations of these tax returns by the relevant tax authorities. Negative or unexpected outcomes of these examinations and audits, and any related litigation, could have a material adverse impact on our results of operations, financial condition and cash flows. See Note 13 - Income Taxes for additional discussion regarding examinations and audits of our tax returns and pending …

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8. EMPLOYEE BENEFIT PLANS PENSION AND OTHER POSTRETIREMENT DEFINED BENEFIT PLANS We sponsor various qualified and non-qualified defined benefit pension plans for our eligible associates. We also maintain hourly and salaried benefit plans that provide postretirement medical, dental, vision and life insurance benefits (OPEB) to our eligible retirees and their dependents in the U.S. Actuarial valuations of our benefit plans were made as of December 31, 2025 and 2024. The primary weighted-average assumptions used in the year-end valuation of our principal plans appear in the following table. The U.S. discount rates are based on an actuarial review of a hypothetical portfolio of long-term, high quality corporate bonds matched against the expected payment stream for each of our plans. The discount rates for the non-U.S. plans are based on hypothetical yield curves developed from corporate bond yield information within each regional market. The assumptions for expected return on plan assets are based on future capital market expectations for the asset classes represented within our portfolios and a review of long-term historical returns. The rates of increase in compensation and health care costs are based on current market conditions, inflationary expectations and historical information. Pension Benefits OPEB 2025 2024 2023 2025 2024 2023 U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Discount rate 5.35 % 5.15 % 5.65 % 4.95 % 5.15 % 4.50 % 5.45 % 5.70 % 5.15 % Expected return on plan as …

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9. STOCK-BASED COMPENSATION AND OTHER INCENTIVE COMPENSATION STOCK-BASED COMPENSATION At December 31, 2025, we had stock-based awards outstanding under stock compensation plans approved by our stockholders. Under these plans, shares have been authorized for issuance to our directors, officers and certain other associates in the form of unvested restricted stock units, performance shares or other awards that are based on the value of our common stock. Shares available for future grants at December 31, 2025 were 6.0 million. The current stock plan will expire in May 2028. RESTRICTED STOCK UNITS We have awarded restricted stock units (RSUs). Compensation expense associated with RSUs is recorded to paid-in-capital ratably over the three-year vesting period. The following table summarizes activity relating to our RSUs: Weighted-Average Number of Grant Date Fair Shares/Units Value per Share/Unit (in millions, except per share data) Outstanding at January 1, 2023 4.9 $ 7.66 Granted 1.3 8.36 Vested (2.6) 5.62 Canceled (0.2) 9.53 Outstanding at December 31, 2023 3.4 $ 9.34 Granted 1.6 6.83 Vested (0.5) 10.15 Canceled (0.1) 8.29 Outstanding at December 31, 2024 4.4 $ 8.38 Granted 2.3 4.60 Vested (1.3) 9.43 Canceled (0.4) 6.14 Outstanding at December 31, 2025 5.0 $ 6.56 As of December 31, 2025, unrecognized compensation cost related to unvested RSUs totaled $10.2 million. The weighted-average period over which this cost is expected to be recognized is approximately two years. In 2025 an …

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6. FAIR VALUE ASC 820 - Fair Value Measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The definition is based on an exit price rather than an entry price, regardless of whether the entity plans to hold or sell the asset. This guidance also establishes a fair value hierarchy to prioritize inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. FINANCIAL INSTRUMENTS The estimated carrying value of our financial assets and liabilities that are recognized at fair value on a recurring basis, using available market information and other observable data, are as follows: Fair Value December 31, 2025 December 31, 2024 Input (in millions) Balance Sheet Classification Cash equivalents $ 183.1 $ 257.3 Level 1 Prepaid expenses and other Cash flow hedges - currency forward contracts 9.0 1.2 Level 2 Cash flow hedges - variable-to-fixed interest rate swap 0.1 Level 2 Nondesignated - currency forward contracts 53.7 Level 2 Other assets and deferred charges Cash flow hedges - currency forward contracts 4.9 Level 2 Fair value hedges - fixed-to …

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3. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The following table provides a reconciliation of changes in goodwill for the year ended December 31, 2025 and the year ended December 31, 2024: Consolidated (in millions) Balance as of January 1, 2024 $ 182.1 Reclassification to Assets held-for-sale (8.3) Foreign currency translation (1.8) Balance as of December 31, 2024 $ 172.0 Foreign currency translation 2.4 Balance as of December 31, 2025 $ 174.4 We conduct our annual goodwill impairment test in the fourth quarter of each year, as well as whenever adverse events or changes in circumstances indicate a possible impairment. In performing this test, we utilize a third-party valuation specialist to assist management in determining the fair value of our reporting units. Fair value of each reporting unit is estimated based on a combination of discounted cash flows and the use of pricing multiples derived from an analysis of comparable public companies multiplied against historical and/or anticipated financial metrics of each reporting unit. These calculations contain uncertainties as they require management to make assumptions including, but not limited to, market comparables, future cash flows of the reporting units, and appropriate discount and long-term growth rates. This fair value determination is categorized as Level 3 within the fair value hierarchy. For our goodwill impairment test in the fourth quarter of 2025, we utilized a Step 0 qualitative analysis, as permitted under …

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"13. INCOME TAXES The components of income (loss) before income taxes are as follows: 2025 2024 2023 (in millions) U.S. loss $ (61.8) $ (54.7) $ (212.5) Non-U.S. income 63.3 117.5 188.0 Total income (loss) before income taxes $ 1.5 $ 62.8 $ (24.5) The following is a summary of the components of our provision for income taxes: 2025 2024 2023 (in millions) Current Federal $ 9.2 $ 10.3 $ 8.5 State and local 0.9 0.9 0.9 Non-U.S. 43.0 56.7 38.0 Total current $ 53.1 $ 67.9 $ 47.4 Deferred Federal $ (27.0) $ (31.2) $ (38.5) State and local (0.4) (0.5) Non-U.S. (4.5) (8.9) 0.7 Total deferred $ (31.9) $ (40.1) $ (38.3) Total income tax expense $ 21.2 $ 27.8 $ 9.1 The following is a reconciliation of income taxes calculated at the U.S. federal statutory income tax rate of 21% in 2025 to our provision for income taxes, including the additional disclosure requirements as set forth in ASU 2023-09, which we adopted in 2025 on a prospective basis: 2025 (in millions) Federal statutory income tax expense and rate $ 0.3 21.0 % State and local income taxes, net of federal income tax effect 0.4 26.7 % Non-U.S. tax effects Brazil Statutory tax rate difference 2.7 180.0 % Changes in valuation allowances (5.9) (393.3) % Other 1.6 106.7 % China Changes in valuation allowances 3.5 233.3 % Other (3.3) (220.0) % France 3.3 220.0 % Germany Changes in valuation allowances 16.2 1,080.0 % Statutory tax rate difference (3.5) (233.3) % Other (1.7) (113.3) % Mexico Statutory tax rate difference 4.0 266.7 % Un …

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4. LONG-TERM DEBT Long-term debt, net consists of the following: December 31, 2025 2024 (in millions) Revolving credit facility $ $ Term Loan A Facility 484.3 484.3 Term Loan B Facility 648.0 648.0 7.75% Notes due 2033 1,250.0 6.875% Notes due 2028 250.0 400.0 6.50% Notes due 2027 500.0 6.375% Notes due 2032 850.0 5.00% Notes due 2029 600.0 600.0 Non-U.S. credit facilities 10.7 27.6 Total debt 4,093.0 2,659.9 Less: Current portion of long-term debt 10.4 47.9 Long-term debt 4,082.6 2,612.0 Less: Debt issuance costs 43.5 35.1 Long-term debt, net $ 4,039.1 $ 2,576.9 SENIOR SECURED CREDIT FACILITIES Dauch Corporation (Dauch) and American Axle & Manufacturing, Inc. (AAM, Inc.) are parties to an amended and restated credit agreement that was entered into on March 11, 2022 and has been subsequently amended (as so amended, the Amended and Restated Credit Agreement) which provides for a term loan A facility (the Term Loan A Facility), term loan B facility (the Term Loan B Facility), incremental tranche C term facility (the Tranche C Term Facility) and a multi-currency revolving credit facility (the Revolving Credit Facility and together with the Term Loan A Facility, the Term Loan B Facility and Tranche C Term Facility, the Senior Secured Credit Facilities). The Senior Secured Credit Facilities are secured by a first priority security interest in substantially all of the assets of AAM, Inc., Dauch and AAM, Inc.'s wholly owned domestic subsidiaries, subject to certain thresholds, e …

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EFFECT OF NEW ACCOUNTING STANDARDS Standards Recently Adopted Accounting Standards Update 2023-09 On December 14, 2023, the FASB issued ASU 2023-09 - Improvements to Income Tax Disclosures (Topic 740). ASU 2023-09 expands the existing disclosure requirements for the annual rate reconciliation between the effective tax rate and the statutory federal tax rate by requiring reconciliation items to be disaggregated by defined categories and disclosed as both percentages and amounts. ASU 2023-09 also requires the disaggregation of income taxes paid by jurisdiction for each annual period presented. We adopted this guidance prospectively on January 1, 2025. See Note 13- Income Taxes for our updated income tax disclosures. Standards Not Yet Adopted Accounting Standards Update 2024-03 On November 4, 2024, the FASB issued ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 expands existing annual and interim requirements for costs and expenses to include a footnote disclosure disaggregating expense captions on the face of the income statement by specific expense categories using a tabular presentation. ASU 2024-03 also requires a qualitative disclosure of the amounts remaining in relevant expense captions that are not separately disclosed as part of the specific expense categories, as well as disclosures about the entity's total selling expenses and in annual periods, a definition of selling expenses.This gu …

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11. REVENUE FROM CONTRACTS WITH CUSTOMERS The guidance in ASC 606 - Revenue from Contracts with Customers is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We are obligated under our contracts with customers to manufacture and supply products for use in our customers operations. We satisfy these performance obligations at the point in time that the customer obtains control of the products, which is the point in time that the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the products. This typically occurs upon shipment to the customer in accordance with purchase orders and delivery releases issued by our customers. There is judgment involved in determining when the customer obtains control of the products and we have utilized the following indicators of control in our assessment: We have the present right to payment for the asset; The customer has legal title to the asset; We have transferred physical possession of the asset; The customer has the significant risks and rewards of ownership of the asset; and The customer has accepted the asset. Our product offerings by segment are as follows: Driveline products consist primarily of front and rear axles, driveshafts, differential assemblies, clutch modules, balance shaft system …

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16. SEGMENT AND GEOGRAPHIC INFORMATION Our business is organized into Driveline and Metal Forming segments, with each representing a reportable segment under ASC 280 - Segment Reporting . The results of each segment are regularly reviewed by the chief operating decision maker (CODM) to assess the performance of the segment and make decisions regarding the allocation of resources to the segments. Our CODM is our Chief Executive Officer . Our product offerings by segment are as follows: Driveline products consist primarily of front and rear axles, driveshafts, differential assemblies, clutch modules, balance shaft systems, disconnecting driveline technology, and electric and hybrid driveline products and systems for light trucks, SUVs, CUVs, passenger cars and commercial vehicles; and Metal Forming products consist primarily of engine, transmission, driveline and safety-critical components for traditional internal combustion engine and electric vehicle architectures including light vehicles, commercial vehicles and off-highway vehicles, as well as products for industrial markets. We use Segment Adjusted EBITDA as the measure of earnings to assess the performance of each segment and determine the resources to be allocated to the segments. We define EBITDA to be earnings before interest expense, income taxes, depreciation and amortization. Segment Adjusted EBITDA is defined as EBITDA for our reportable segments excluding the impact of restructuring and acquisition-related costs, …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing