US Auto Suppliers: Updated Thoughts and 3Q26 EPS Preview: Inflation/Softer Production Weigh Near-Term; Focus on Recoveries, Non-Auto Traction and BS Deployment; Stay Selective

Softer production and renewed inflation pressure reset near-term expectations; focus on recoveries, non-auto traction, prelim 2027 commentary and balance sheet optionality. We are positioned modestly below consensus on average for 3Q26 EBITDA across our supplier coverage and see the group overall at risk of a modest miss, consistent with softer production trends and renewed logistics, fuel and electronics inflation. Since the 2Q26 EPS season, suppliers have re-rated lower. We continue to view the setup for auto suppliers as more favorable relative to the OEMs and franchise dealers. Tactically, we prefer names with a more supportive near-term backdrop including DAN, BWA, THRM and VC, while we see greater near-term earnings risk at DCH, GNTX and APTV. Overall, we view ADNT, DAN, THRM and VC best positioned into 2027 on overall organic profit growth plus capital deployment.