Financial Analysis

ACQUISITION On August 1, 2025, the Company acquired 100% of Swedish Electromagnet Invest AB (SEM) for $46 million, comprised of $14 million of cash consideration and $32 million cash used to extinguish debt assumed through the acquisition (the SEM Acquisition). During the three months ended June 30, 2026, the Company reduced the purchase consideration associated with the SEM Acquisition by $1 million as a result of the resolution of certain acquisition-related matters. The adjustment resulted in a corresponding decrease to goodwill. SEM is part of the Fuel Systems segment, and is a provider of advanced natural gas, hydrogen and other alternative fuel ignition systems, injector stators and linear position sensors. The SEM Acquisition was accounted for as a business combination, with the purchase price, net of cash acquired, allocated on a preliminary basis as of August 1, 2025. The preliminary allocation of the purchase price to acquired assets and liabilities assumed, including the residual amount recognized as goodwill, is based upon estimated information and is subject to change within the measurement period. The measurement period is a period not to exceed one year from the acquisition date during which the Company may adjust estimated or provisional amounts recorded during purchase accounting if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets o …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

CONTINGENCIES In the normal course of business, the Company is party to various commercial and legal claims, actions and complaints, including matters involving warranty claims, intellectual property claims, and governmental investigations and related proceedings. It is not possible to predict with certainty whether or not the Company will ultimately be successful in any of these commercial and legal matters or, if not, what the impact might be. The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in commercial and legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and reasonably estimable, the Company does not establish an accrued liability. The Companys management does not expect that an adverse outcome in any of these commercial and legal claims, actions and complaints that are currently pending will have a material adverse effect on the Companys results of operations, financial position or cash flows. An adverse outcome could, nonetheless, be material to the results of operations, financial position or cash flows. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

NOTES PAYABLE AND DEBT As of June 30, 2026 and December 31, 2025, the Company had debt outstanding as follows: (in millions) June 30, 2026 December 31, 2025 Short-term debt Short-term borrowings $ 50 $ 2 Long-term debt 6.750% Senior notes due 04/15/2029 ($525 million par value) 520 519 6.625% Senior notes due 10/15/2032 ($450 million par value) 445 445 Finance leases 4 4 Total long-term debt $ 969 $ 968 Less: current portion 1 1 Long-term debt, net of current portion $ 968 $ 967 The Companys long-term debt includes various covenants, none of which are expected to restrict future operations. The Company was in compliance with all covenants as of June 30, 2026. As of June 30, 2026, the estimated fair values of the Companys long-term debt totaled $999 million, which is $34 million higher than carrying value for the same period. As of December 31, 2025, the estimated fair value of the Companys long-term debt totaled $1,011 million, which was $47 million higher than carrying value for the same period. Fair market values of the long-term debt are developed using observable values for similar debt instruments, which are considered Level 2 inputs as defined by Accounting Standards Codification (ASC) Topic 820. The carrying values of the Companys other debt facilities approximate fair value. The fair value estimates do not necessarily reflect the values the Company could realize in the current markets. The Company has a $500 million revolving credit facility (the Revolving Facility) w …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table represents a disaggregation of revenue from contracts with customers by reportable segment and region for the three and six months ended June 30, 2026 and 2025. Refer to Note 21, Reportable Segments and Related Information to the Condensed Consolidated Financial Statements, for more information. Three Months Ended June 30, 2026 (in millions) Fuel Systems Aftermarket Total Americas $ 196 $ 200 $ 396 Europe 261 135 396 Asia 127 21 148 Total $ 584 $ 356 $ 940 Three Months Ended June 30, 2025 (in millions) Fuel Systems Aftermarket Total Americas $ 184 $ 185 $ 369 Europe 237 130 367 Asia 135 19 154 Total $ 556 $ 334 $ 890 Six Months Ended June 30, 2026 (in millions) Fuel Systems Aftermarket Total Americas $ 389 $ 387 $ 776 Europe 495 257 752 Asia 249 41 290 Total $ 1,133 $ 685 $ 1,818 Six Months Ended June 30, 2025 (in millions) Fuel Systems Aftermarket Total Americas $ 361 $ 364 $ 725 Europe 444 240 684 Asia 241 36 277 Total $ 1,046 $ 640 $ 1,686 …

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GOODWILL AND OTHER INTANGIBLES During the fourth quarter of each year, the Company assesses its goodwill and indefinite-lived intangibles assigned to each of its reporting units for impairment by either performing a qualitative assessment or a quantitative analysis. No events or circumstances were noted in the first six months of 2026 requiring additional assessment or testing. A summary of the components in the carrying amount of goodwill as of June 30, 2026 and December 31, 2025 is as follows: (in millions) Fuel Systems Aftermarket Total Gross goodwill balance, December 31, 2025 $ 71 $ 551 $ 622 Accumulated impairment losses (113) (113) Net goodwill balance, December 31, 2025 $ 71 $ 438 $ 509 Goodwill during the period: Measurement period adjustments (1) (1) Translation adjustment (1) 2 1 Net goodwill balance, June 30, 2026 $ 69 $ 440 $ 509 The Companys other intangible assets from acquisitions consist of the following: June 30, 2026 December 31, 2025 (in millions) Estimated useful lives (years) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Amortized intangible assets: Patented and unpatented technology 6 - 15 $ 161 $ 71 $ 90 $ 164 $ 66 $ 98 Customer relationships 12 - 15 288 150 138 291 141 150 Total amortized intangible assets 449 221 228 455 207 248 Unamortized trade names 148 148 150 150 Total other intangible assets $ 597 $ 221 $ 376 $ 605 $ 207 $ 398 …

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INCOME TAXES The Companys provision for income taxes is based upon an estimated annual effective tax rate for the year applied to domestic and foreign income. On a quarterly basis, the annual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter. The Companys effective tax rate for the three months ended June 30, 2026 was 40% and is comparable to the effective tax rate for the three months ended June 30, 2025 of 39%. The Companys effective tax rate for the six months ended June 30, 2026 and 2025 was 38% and 42%, respectively. The effective tax rate for the six months ended June 30, 2026 decreased as compared to the six months ended June 30, 2025 as a result of an uncertain tax position recorded discretely in the six month period ended June 30, 2025 that did not recur in the six month period ended June 30, 2026. The annual effective tax rates differ from the U.S. statutory rate primarily due to foreign tax rates that vary from those in the U.S., U.S. taxes on foreign earnings, and permanent differences between book and tax treatment for certain items including enhanced deduction of R&D expenses in certain jurisdictions. The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (refe …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

New Accounting Pronouncements Accounting Standards Not Yet Adopted In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03 and ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). This guidance requires entities to disclose disaggregated information about certain income statement expense line items in the notes to the financial statements. This guidance is effective for annual reporting periods beginning after December 15, 2026. These ASUs will result in additional disclosures but will not have a material impact on the Company's Consolidated Financial Statements. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This guidance requires entities to capitalize internal-use software costs when the Company has authorized and committed funding and it is probable the project will be completed. This guidance is effective for annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this ASU on its financial statements. In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. This guidance enables entities to apply hedge accounting to a greater number of highly effective economic hedges in Similar Risk Assessment fo …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

RETIREMENT BENEFIT PLANS The Company sponsors various defined contribution savings plans, primarily in the U.S., that allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan specified guidelines. The Company also has a number of defined benefit pension plans. Under specified conditions, the Company will make contributions to the plans and/or match a percentage of the employee contributions up to certain limits. The estimated contributions to the defined benefit pension plans for 2026 range from $12 million to $14 million, of which $5 million has been contributed through the first six months of the year. The components of net periodic benefit income recorded in the Condensed Consolidated Statements of Operations are as follows: Three Months Ended June 30, Six Months Ended June 30, (in millions) 2026 2025 2026 2025 Service cost $ 1 $ 1 $ 2 $ 2 Interest cost 12 12 23 23 Expected return on plan assets (14) (11) (26) (21) Net periodic benefit (income) cost $ (1) $ 2 $ (1) $ 4 Service cost and the components of net periodic benefit cost other than the service cost component are included primarily in Cost of sales and Other postretirement (income) expense, net, respectively, in the Condensed Consolidated Statements of Operations.

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RESTRUCTURING The Companys restructuring activities are undertaken as necessary to execute the Companys strategy and streamline operations, consolidate and take advantage of available capacity and resources, and ultimately achieve net cost reductions. During the six months ended June 30, 2026, the Company has continued to implement actions as part of a strategic effort to align its legacy infrastructure with current business needs and reduce costs in response to ongoing industry headwinds. Beginning in 2025 and continuing through 2027, the Company anticipates incurring an aggregate of approximately $40 million in restructuring charges under these initiatives, with estimated annual savings of $30 million once fully implemented. As of June 30, 2026, the Company has recognized $20 million of restructuring expense related to these initiatives. The Companys restructuring expenses consist primarily of employee termination benefits (principally severance and/or other termination benefits) and other costs, which are primarily information technology infrastructure right-sizi ng. The following table displays a roll forward of the restructuring liability recorded within the Companys Condensed Consolidated Balance Sheets and the related cash flow activity: (in millions) Employee termination benefits Other Total Balance at January 1, 2026 $ 5 $ 1 $ 6 Restructuring expense, net 3 8 11 Cash payments (5) (6) (11) Balance at June 30, 2026 3 3 6 Less: Non-current restructuring liability 1 1 Cu …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

REVENUE FROM CONTRACTS WITH CUSTOMERS The Company manufactures and sells products and solutions, primarily to original equipment manufacturers (OEMs) of commercial vehicle, industrial applications and light vehicles, to certain Tier One vehicle systems suppliers and into the aftermarket. The Companys payment terms are based on customary business practices and vary by customer type and products offered. The Company has evaluated the terms of its arrangements and determined that they do not contain significant financing components. In limited instances, certain customers have provided payments in advance of receiving related products, typically at the onset of an arrangement prior to the beginning of production. As of June 30, 2026, the balance of contract liabilities was $22 million, of which $9 million was reflected in Other current liabilities and $13 million was reflected in Other non-current liabilities. As of December 31, 2025, the balance of contract liabilities was $17 million, of which $7 million was reflected in Other current liabilities and $10 million was reflected as Other non-current liabilities. These amounts are reflected as revenue over the term of the arrangement (typically three to seven years) as the underlying products are shipped and represent the Companys remaining performance obligations as of the end of the period. The following table represents a disaggregation of revenue from contracts with customers by reportable segment and region for the three and …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

REPORTABLE SEGMENTS AND RELATED INFORMATION The Companys business is comprised of two reportable segments, which are further described below. These segments are strategic business groups, which are managed separately as each represents a specific grouping of related automotive components and systems. In the fourth quarter of 2025, the Company made a strategic decision to shift a significant portion of the original equipment service (OES) business, previously reported in its Aftermarket segment, to the Fuel Systems segment, as distribution will now be handled by the Fuel Systems locations that manufacture the products. This is expected to streamline the sales structure to external customers while also reducing administrative efforts. The reporting segment disclosures have been updated accordingly which included recasting prior period information for the new reporting structure. Fuel Systems. This segment provides advanced fuel injection systems, fuel delivery modules, canisters, sensors, electronic control modules and associated software. Our highly engineered fuel injection systems portfolio includes pumps, injectors, fuel rail assemblies, engine control modules, and complete systems, including software and calibration services, that reduce emissions and improve fuel economy for traditional and hybrid applications. Aftermarket. Through this segment, the Company sells products to independent aftermarket customers. Its product portfolio includes a wide range of products as well …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

STOCKHOLDERS' EQUITY The changes of the Stockholders Equity items during the three and six months ended June 30, 2026 and 2025, are as follows: (in millions) Issued common stock Additional paid-in-capital Treasury stock Retained earnings Accumulated other comprehensive income (loss) Total equity Balance, March 31, 2026 $ 1 $ 1,973 $ (479) $ 158 (104) $ 1,549 Dividends declared ($0.30 per share) (11) (11) Stock-based compensation expense 7 7 Purchase of treasury stock (42) (42) Excise tax on purchase of treasury stock (1) (1) Net issuance of executive stock plan (1) (1) Net earnings 40 40 Balance, June 30, 2026 $ 1 $ 1,979 $ (522) $ 187 $ (104) $ 1,541 (in millions) Issued common stock Additional paid-in-capital Treasury stock Retained earnings Accumulated other comprehensive income (loss) Total equity Balance, March 31, 2025 $ 1 $ 1,970 $ (327) $ 59 $ (166) $ 1,537 Dividends declared ($0.27 per share) (10) (10) Stock-based compensation expense 4 4 Purchase of treasury stock (40) (40) Net earnings 46 46 Other comprehensive income 90 90 Balance, June 30, 2025 $ 1 $ 1,974 $ (367) $ 95 $ (76) $ 1,627 (in millions) Issued common stock Additional paid-in-capital Treasury stock Retained earnings Accumulated other comprehensive income (loss) Total equity Balance, December 31, 2025 $ 1 $ 1,978 $ (426) $ 132 $ (98) $ 1,587 Dividends declared ($0.60 per share) (22) (22) Stock-based compensation expense 12 12 Purchase of treasury stock (98) (98) Excise tax on purchase of treasury stock ( …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing