Summary of PHINIA Conference Call Company Overview - PHINIA is a diversified industrial company with approximately $3.4 billion in revenue and 12,000 employees globally [3][4] - The company operates in various markets including aftermarket, light vehicles, off-highway construction, and commercial vehicles, primarily under the Delphi brand [3][4] Financial Performance - In Q3, PHINIA reported sales of $908 million, an 8% increase year-over-year, with adjusted EBITDA of $133 million, representing a margin of 14.6% [11][12] - The company expects an average organic growth rate of 2%-4% from 2021 to 2023, with strong margins in the 14%-15% range and a net leverage of about 1.4% [6][7] - Free cash flow for the previous year was over $240 million, with a target of approximately $190 million for the current year [7][12] Market Dynamics - The company has a diversified customer base, with 34% of sales coming from service portions, including independent aftermarket and original equipment service [4] - PHINIA has a balanced geographical presence, with around 40% of sales from the Americas and Europe, and a joint venture in India contributing over $200 million [4][5] Tariffs and FX Impact - The company anticipates a total tariff impact of $40-$50 million for the year, which is expected to be offset by customer agreements [21][22] - PHINIA has been proactive in ensuring compliance with USMCA regulations and is evaluating its manufacturing footprint in response to tariff impacts [22][24] Competitive Landscape - PHINIA has gained market share by continuing to invest in combustion technologies while competitors have exited the market [37][38] - The company aims to increase its market share in gasoline direct injection (GDI) from low teens to over 20% by the end of the decade [38] Aerospace Opportunities - PHINIA has recently entered the aerospace market, having won contracts and completed quality certifications, with expectations for further business growth [47][48] M&A Strategy - The company completed a tuck-in acquisition of SEM, an ignition company, for about $50 million, which aligns with its focus on commercial vehicle and alternative fuels [10][50] - Future acquisitions will focus on companies with significant exposure to commercial vehicles and aftermarket services, with a preference for lower multiples compared to PHINIA's current valuation [51][56] Capital Allocation - PHINIA prioritizes organic growth, maintaining a strong dividend, and evaluating M&A opportunities against share buybacks [63] Conclusion - PHINIA is positioned for stable growth with a focus on alternative fuels, electronics, and strategic acquisitions, while navigating challenges from tariffs and market dynamics [8][9][60]

Summary of PHINIA FY Conference Call (November 04, 2025) Company Overview - **Company Name**: PHINIA - **Ticker**: NYSE:PHIN - **Location**: Auburn Hills, Michigan - **Market Focus**: Automotive OE market, commercial trucks, and aftermarket - **Shares Outstanding**: Approximately 39 million - **Equity Capitalization**: About $2 billion - **Net Debt**: Approximately $600 million - **Total Enterprise Value**: $2.7 billion - **Parent Company**: Spin-off from BorgWarner Core Business Insights - **Aftermarket Focus**: Over one-third of business is in the aftermarket, including OES and independent aftermarket [5][19] - **Commercial Vehicle Sales**: Nearly 40% of sales come from commercial vehicles, including light, medium, and heavy-duty segments [5] - **Light Passenger Vehicle Sales**: Less than 30% of sales are from OE light passenger vehicles [5] - **Growth Strategy**: Emphasis on expanding in commercial vehicle, off-highway, and aerospace markets while significantly growing the aftermarket [6][19] Technology and Innovation - **Fuel Management Systems**: The company has advanced its fuel management systems, adapting technologies from light vehicles to commercial vehicles and aerospace applications [8][11] - **Alternative Fuels**: Development of technologies for various fuel types, including gasoline, diesel, ethanol, methanol, and hydrogen [9][10] - **Regulatory Compliance**: The company is positioned to benefit from regulatory shifts, particularly in light vehicle emissions standards [20][21] Financial Performance and Strategy - **Economic Value Focus**: The company uses a 15% minimum hurdle rate for evaluating new opportunities, ensuring that all projects generate economic value [13] - **Cash Flow Generation**: Strong focus on generating cash flow and maintaining financial discipline, with over $500 million returned to shareholders through dividends and share repurchases [27] - **Tax Rate Management**: The tax rate has been reduced from over 40% to a projected 33%-36%, with a goal of reaching mid- to high 20s% by 2028 [42][43] Market Position and Competitive Landscape - **Diversified Industrial Approach**: PHINIA positions itself as a diversified industrial company, reducing reliance on any single market segment [30] - **Brand Strength**: The Delphi brand is leveraged for growth in commercial vehicle and off-highway markets, with a focus on maintaining quality standards [32][33] Future Outlook - **Investor Day**: An investor day is scheduled for February 2026 to provide further insights into the company's portfolio and growth strategies [50][51] - **Aerospace Opportunities**: The aerospace segment presents significant growth potential, with the company well-equipped to meet industry standards [51][52] Additional Considerations - **Supply Chain Management**: The company has successfully navigated supply chain challenges and tariffs, maintaining a strong operational strategy [35][36] - **Acquisition Strategy**: PHINIA is open to acquisitions that align with its growth strategy, having recently completed a small acquisition focused on commercial vehicles [45][46] This summary encapsulates the key points discussed during the conference call, highlighting PHINIA's strategic focus, market positioning, and future growth opportunities.

Core Points - PHINIA Inc. has declared a quarterly cash dividend of $0.27 per common share [1] - The dividend is payable on December 12, 2025, to shareholders of record as of November 24, 2025 [1] - PHINIA is recognized as a leader in premium fuel systems, electrical systems, and aftermarket solutions [1]

Core Viewpoint - PHINIA Inc. will participate in Baird's 2025 Global Industrial Conference on November 13, 2025, focusing on industry dynamics and the company's business [1] Company Participation - The participation will be in-person and will include a Q&A session [1] - Key executives attending include President and CEO Brady Ericson and Vice President and CFO Chris Gropp [1]

Core Insights - Phinia (PHIN) reported revenue of $908 million for the quarter ended September 2025, reflecting an 8.2% increase year-over-year and surpassing the Zacks Consensus Estimate of $868.76 million by 4.52% [1] - The company's EPS for the quarter was $1.59, compared to $1.17 in the same quarter last year, resulting in an EPS surprise of 35.9% [1] Financial Performance - Revenue breakdown by geography: - Americas: $382 million, exceeding the estimated $366.74 million - Europe: $367 million, above the estimated $361.4 million - Asia: $159 million, surpassing the estimated $140.22 million [4] - Net sales in specific segments: - Aftermarket: $359 million, below the estimated $367.38 million - Fuel Systems: $549 million, exceeding the estimated $531.41 million [4] Market Performance - Phinia's shares have returned -3.8% over the past month, contrasting with the Zacks S&P 500 composite's +3.6% change, indicating potential underperformance in the near term [3]

Financial Performance - PHINIA's net sales for Q3 2025 reached $908 million, an increase of $69 million or 8% compared to $839 million in Q3 2024[120] - Gross profit for Q3 2025 was $200 million, up from $187 million in Q3 2024, resulting in a gross profit margin of 22%[120] - Net earnings for Q3 2025 were $13 million, a decrease from $31 million in Q3 2024, leading to a net earnings per diluted share of $0.33 compared to $0.70 in the prior year[119][132] - Net sales for the nine months ended September 30, 2025, totaled $2,594 million, an increase of $24 million, or 1%, compared to the same period in 2024[142] - Net earnings for the nine months ended September 30, 2025, were $85 million, or 3.2% of net sales, compared to $74 million, or 3.0% in 2024[141] - The Company's net earnings per diluted share increased to $2.10 for the nine months ended September 30, 2025, up from $1.63 in 2024[154] Cost and Expenses - The cost of sales for Q3 2025 was $708 million, maintaining a cost percentage of 78% of net sales, consistent with Q3 2024[120] - SG&A expenses for Q3 2025 were $105 million, down from $108 million in Q3 2024, with SG&A as a percentage of net sales decreasing from 13% to 12%[122] - Other operating expenses increased significantly to $57 million in Q3 2025 from $7 million in Q3 2024, primarily due to $39 million in separation-related costs[125] - Total cost of sales for the nine months ended September 30, 2025, was $2,025 million, representing 78.1% of net sales, compared to $2,003 million and 77.9% in 2024[142] - Corporate expenses not allocated to Segment AOI were $75 million for the nine months ended September 30, 2025, compared to $63 million in 2024[158] - Interest expense decreased to $60 million for the nine months ended September 30, 2025, down from $81 million in 2024, primarily due to debt restructuring[151] Segment Performance - The Fuel Systems segment reported net sales of $1,727 million for the nine months ended September 30, 2025, representing 66.6% of total net sales, while the Aftermarket segment reported $1,035 million, or 39.9%[141] - Segment Adjusted Operating Income (AOI) for the Fuel Systems segment was $73 million with a margin of 13.3% for the three months ended September 30, 2025, compared to $55 million and 11.4% in 2024[138][139] - The Aftermarket segment's Segment AOI decreased to $54 million with a margin of 15.0% for the three months ended September 30, 2025, down from $56 million and 15.8% in 2024[139] - For the nine months ended September 30, 2025, net sales for the Fuel Systems segment were $1,559 million with a Segment AOI of $180 million, resulting in a margin of 11.5%, compared to $1,529 million and $162 million (10.6% margin) for the same period in 2024[160] - The Aftermarket segment reported net sales of $1,035 million and a Segment AOI of $163 million for the nine months ended September 30, 2025, with a margin of 15.7%, down from $1,041 million and $169 million (16.2% margin) in 2024[161] - The total net sales for the company for the nine months ended September 30, 2025, were $2,594 million, with a total Segment AOI of $343 million[160] Tax and Liquidity - The effective tax rate for Q3 2025 was 32%, down from 42% in Q3 2024, influenced by favorable tax adjustments despite a significant loss related to separation claims[130] - The effective tax rate for the nine months ended September 30, 2025, was 41%, a decrease from 49% in 2024, attributed to a change in the jurisdictional mix of pre-tax earnings[152] - As of September 30, 2025, the company had liquidity of $848 million, consisting of $349 million in cash and cash equivalents and $499 million available on its revolving credit facility[162] - The company expects to maintain sufficient liquidity and compliance with all covenants for at least the next 12 months[162] Future Outlook - PHINIA expects a decline in light vehicle volumes by low-single digit percentages in 2025, with commercial vehicle volumes expected to remain flat[113] - The acquisition of Swedish Electromagnet Invest AB for $47 million is anticipated to generate approximately $50 million in annual revenue and $10 million in adjusted EBITDA[111] - PHINIA maintains a positive long-term outlook, focusing on new product development and market share expansion in the commercial vehicle sector[115] Cash Flow - Net cash provided by operating activities decreased to $216 million for the nine months ended September 30, 2025, from $235 million in 2024, primarily due to increased working capital demands[166] - Net cash used in investing activities increased to $103 million in 2025 from $84 million in 2024, mainly due to capital expenditures and the SEM acquisition, representing 3.7% of sales in 2025 compared to 3.3% in 2024[167] - Net cash used in financing activities rose significantly to $245 million in 2025 from $61 million in 2024, primarily due to stock repurchases and debt repayment[168] Currency and Adjustments - The company reported a pre-tax loss of $6 million for the designated net investment hedge as of September 30, 2025, compared to a loss of $11 million at the end of 2024[173] - Currency translation adjustments for the nine months ended September 30, 2025, included a 13% increase against the Euro, resulting in a $75 million impact on other comprehensive income[175]

Core Insights - Phinia (PHIN) reported quarterly earnings of $1.59 per share, exceeding the Zacks Consensus Estimate of $1.17 per share, and showing a year-over-year increase from $1.17 per share [1] - The company achieved revenues of $908 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 4.52% and up from $839 million a year ago [2] - Phinia's stock has increased approximately 14.1% year-to-date, compared to a 16.9% gain for the S&P 500 [3] Earnings Performance - The earnings surprise for the recent quarter was +35.90%, following a previous surprise of +28.28% when earnings were $1.27 per share against an expectation of $0.99 [1][2] - Over the last four quarters, Phinia has exceeded consensus EPS estimates two times and revenue estimates three times [2] Future Outlook - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $1.16 for the upcoming quarter and $4.55 for the current fiscal year [7] - The Zacks Rank for Phinia is currently 4 (Sell), indicating expectations of underperformance in the near future due to unfavorable estimate revisions prior to the earnings release [6] Industry Context - Phinia operates within the Zacks Automotive - Original Equipment industry, which is currently ranked in the top 29% of over 250 Zacks industries, suggesting a favorable industry backdrop [8] - The performance of Phinia's stock may also be influenced by the overall outlook for the automotive industry [8]

PHINIA (NYSE:PHIN) Q3 2025 Earnings Call October 28, 2025 08:30 AM ET Company ParticipantsChris Gropp - CFOJake Scholl - Equity Research AssociateKellen Ferris - VP of Investor RelationsBrady Ericson - CEOConference Call ParticipantsJoseph Spak - AnalystBobby Brooks - Senior Research AnalystOperatorGood morning. My name is Audra. I'll be your conference operator today. At this time, I would like to welcome everyone to the PHINIA third quarter 2025 earnings call. Today's conference is being recorded. All lin ...

Financial Data and Key Metrics Changes - The company reported record net sales of $908 million for Q3 2025, an increase of 8.2% year-over-year, benefiting from the SEM acquisition, favorable foreign exchange, and customer pricing related to tariff recoveries [7][18] - Adjusted EBITDA reached $133 million with a margin of 14.6%, reflecting a 30 basis point year-over-year expansion, primarily due to lower R&D expenses and strong performance from the fuel systems segment [7][8] - Adjusted earnings per share increased to $1.59 from $1.17 in the same period last year [8] Business Line Data and Key Metrics Changes - The fuel systems segment saw sales increase by 13.4%, with a segment margin of 13.3%, up 190 basis points year-over-year, driven by supply chain savings and productivity improvements [19][20] - The aftermarket segment's sales were slightly up year-over-year, but the margin decreased by 80 basis points to 15% due to unfavorable product mix [20] Market Data and Key Metrics Changes - The company experienced increased volumes in Asia and the Americas, contributing to the overall sales growth [7][19] - The integration of SEM is expected to contribute approximately $50 million in annual sales, although initial headwinds are anticipated due to market challenges [21][39] Company Strategy and Development Direction - The company is focused on enhancing efficiency and data visibility by consolidating four ERP systems into a single global SAP S/4HANA platform [6] - A disciplined approach to capital allocation is being maintained, with $26 million invested in capital expenditures during Q3, primarily for new tooling and equipment [14] - The company is exploring selective M&A opportunities to enhance product offerings and increase market presence [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain macroeconomic and industry outlook but emphasized a focus on operational and cost efficiency initiatives [7] - The company has adjusted its 2025 revenue outlook to account for the SEM acquisition and external factors, raising the midpoint by $40 million [16][24] - Management expressed confidence in generating solid returns despite challenges from low-margin tariff recoveries and market volatility [25] Other Important Information - The company reached an agreement with its former parent company to resolve litigation, expecting that settlement payments will be offset by tax recoveries [9][22] - Cash and cash equivalents stood at $349 million, with total liquidity of approximately $900 million, maintaining a net leverage ratio of 1.4 times [15][23] Q&A Session Summary Question: Inquiry about sales growth excluding acquisition and currency impact - Management indicated that the 5.1% sales growth was balanced between pricing, tariff recoveries, and increased volumes [29] Question: Discussion on pricing and tariff recovery sustainability - Management noted that pricing linked to tariffs is expected to remain sticky unless tariffs are removed, impacting EBITDA margins [30] Question: Impact of aerospace program on customer interest - Management confirmed that successful delivery of aerospace components is expected to attract more inquiries from major engine manufacturers [32] Question: Commentary on Q4 guidance and SEM's performance - Management highlighted that Q4 typically sees lighter volumes and that SEM's initial performance may face headwinds due to seasonal factors [38][39] Question: Clarification on factors affecting EBIT flow-through in fuel systems - Management explained that low margins on certain components, such as ECUs, impacted EBIT flow-through despite strong productivity improvements [44] Question: Update on Ford fuel pump recall impact - Management reported no cash impacts or concerns related to the Ford fuel pump recall [50] Question: Timing and realization of restructuring program savings - Management indicated that the restructuring program is rolling out now, with full realization of savings expected by 2028 [52][53]

Financial Data and Key Metrics Changes - The company reported record net sales of $908 million for Q3 2025, an increase of 8.2% year-over-year, benefiting from the SEM acquisition, favorable foreign exchange, and increased volume in Asia and the Americas [6][18] - Adjusted EBITDA reached $133 million with a margin of 14.6%, reflecting a 30 basis point year-over-year expansion, primarily due to lower R&D expenses and strong performance from the fuel systems segment [6][8] - Adjusted earnings per share increased to $1.59, up from $1.17 in the same period last year [8] Business Line Data and Key Metrics Changes - The fuel systems segment saw sales increase by 13.4%, with a segment margin of 13.3%, up 190 basis points year-over-year, driven by supply chain savings and productivity improvements [19] - The aftermarket segment's sales were slightly up year-over-year, with a margin of 15%, down 80 basis points due to unfavorable product mix [20] Market Data and Key Metrics Changes - The company experienced increased sales volumes in Asia and the Americas, contributing to overall revenue growth [6][19] - The impact of foreign exchange was a favorable $19 million, while the SEM acquisition contributed an additional $8 million to net sales [18][19] Company Strategy and Development Direction - The acquisition of SEM is expected to enhance the company's ignition and electronic control capabilities, creating a platform for innovation and efficiency [5] - The company is consolidating four ERP systems into a single global SAP S/4HANA platform to enhance efficiency and data visibility [5] - The company is focused on operational and cost efficiency initiatives to drive sustainable performance across all markets [6] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain macroeconomic and industry outlook but emphasized a commitment to operational efficiency and customer value [6] - The company adjusted its 2025 revenue guidance upward by $40 million, reflecting contributions from SEM and favorable market conditions [16][25] - Management expressed confidence in generating solid returns despite challenges from tariffs and market volatility [26] Other Important Information - The company returned $41 million to shareholders through dividends and share repurchases during the quarter, maintaining a solid balance sheet with cash and cash equivalents of $349 million [15][24] - The company expects to incur restructuring charges of approximately $35 million to optimize its operations, with an estimated $25 million in annual savings [26] Q&A Session Summary Question: Can you provide more detail on the 5.1% sales increase excluding acquisition and currency impacts? - Management indicated that the increase was balanced between pricing, tariff recoveries, and volume growth [30] Question: Will pricing remain sticky moving forward? - Management stated that pricing linked to tariffs is expected to remain stable unless tariffs are removed, impacting EBITDA margins [31] Question: How is the aerospace program progressing? - Management confirmed increased interest from aerospace companies and expects additional awards in the coming quarters [34] Question: What is the guidance for SEM in Q4? - Management noted that Q4 typically sees lighter sales due to seasonality, with SEM expected to contribute around $7 million [39] Question: What impact is the Ford fuel pump recall having on cash? - Management reported no cash impacts or adjustments to warranty accruals related to the recall [50] Question: When will the restructuring program be fully realized? - Management indicated that the restructuring program is rolling out now, with full realization of savings expected by 2028 [52]