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]

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, 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][20] - The aftermarket segment's sales were slightly up year-over-year, but the margin decreased by 80 basis points to 15% due to an 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 operational 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 efficiency and sustainable performance [7][10] - The company has adjusted its 2025 guidance to account for the SEM acquisition and external factors, raising the midpoint of revenue guidance by $40 million [16][24] - The expected adjusted tax rate has improved to a range of 33% to 37%, reflecting ongoing tax structuring projects [25] Other Important Information - The company reached an agreement with its former parent to resolve litigation, with expectations 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 solid balance sheet [15][23] Q&A Session Summary Question: Inquiry on 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][30] Question: Impact of pricing and tariff recovery on future margins - Management confirmed that pricing linked to tariffs is expected to remain sticky, affecting EBITDA margins [30][31] Question: Aerospace program's impact on future business - Management noted increased interest from aerospace companies following the launch of their first aerospace program, anticipating additional awards [32][33] Question: Commentary on fourth quarter guidance and SEM's performance - Management explained that SEM's expected contribution in Q4 is lower due to seasonal factors and initial integration challenges [37][39] Question: Impact of Ford fuel pump recall on cash flow - Management reported no cash impacts from the recall and no adjustments to warranty accruals [49][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 [51][52]

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]

Q3 2025 EARNINGS October 28, 2025 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of U.S. federal securities laws. Forward-looking statements are statements other than historical fact that provide current expectations or forecasts of future events based on certain assumptions and are not guarantees of future performance. Forward-looking statements use words such as "anticipate," "believe," "continue," "could," "designed," "effect," "estimate," "evaluate," ...

Financial Performance - Net sales for Q3 2025 reached $908 million, an increase of 8.2% compared to Q3 2024, with adjusted sales increasing by 5.1% after excluding foreign currency impacts and the SEM acquisition[4] - Net earnings for Q3 2025 were $13 million, a decrease of $18 million year-over-year, resulting in a net margin of 1.4%, down 230 basis points[4] - Adjusted EBITDA for Q3 2025 was $133 million, reflecting a year-over-year increase of $13 million, with an adjusted EBITDA margin of 14.6%[4] - Adjusted sales for the three months ended September 30, 2025, were $908 million, representing a 8.4% increase from $838 million in the same period of 2024[33] - Adjusted EBITDA for the three months ended September 30, 2025, was $133 million, up 10.8% from $120 million in the same period of 2024[34] - Net earnings for the three months ended September 30, 2025, were $13 million, a decrease of 58.1% compared to $31 million in the same period of 2024[35] - Adjusted free cash flow for Q3 2025 was $104 million, compared to $60 million in Q3 2024, primarily due to higher earnings adjusted for non-cash charges[7] - Adjusted free cash flow for the three months ended September 30, 2025, was $104 million, an increase of 73.3% from $60 million in the same period of 2024[37] Debt and Cash Position - Cash and cash equivalents at the end of Q3 2025 were $349 million, with total debt at $992 million[6] - Total debt as of September 30, 2025, was $992 million, slightly up from $988 million as of December 31, 2024[23] - Net debt increased to $643 million as of September 30, 2025, compared to $504 million as of December 31, 2024[23] - Cash and cash equivalents at the end of the period were $349 million, down from $477 million at the end of the previous quarter[22] Acquisitions and Investments - The company completed the acquisition of Swedish Electromagnet Invest AB for approximately $47 million, enhancing its capabilities in alternative fuel ignition systems[4] - The company reported capital expenditures of $26 million for the three months ended September 30, 2025, compared to $25 million in the same period of 2024[22] Shareholder Returns - The company returned $41 million to shareholders through share repurchases and dividends[4] New Business and Product Development - New product developments include next-generation canister technology for PHEVs and a brushless alternator for industrial applications[4] - The company secured new business with a leading Chinese OEM for gasoline direct injection fuel rail assembly and controller[4] Guidance - Full year 2025 guidance projects net sales between $3.39 billion and $3.45 billion, with net earnings expected to be $100 million to $110 million[8] Operating Activities - For the three months ended September 30, 2025, net cash provided by operating activities was $119 million, an increase of 25.3% compared to $95 million in the same period of 2024[22]

Core Insights - PHINIA Inc. reported strong third-quarter results for 2025, highlighting the effectiveness of its strategic growth initiatives and the dedication of its workforce [3][4]. Financial Performance - Net sales reached $908 million, marking an 8.2% increase compared to Q3 2024. Adjusted sales increased by $43 million or 5.1% when excluding foreign currency impacts and the SEM acquisition [4][27]. - Net earnings were $13 million with a net margin of 1.4%, a decrease of $18 million and 230 basis points year-over-year, primarily due to a one-time loss related to separation claims [4][16]. - Adjusted EBITDA was $133 million, with an adjusted EBITDA margin of 14.6%, reflecting a year-over-year increase of $13 million and 30 basis points [4][28]. - The company returned $41 million to shareholders through share repurchases and dividends [4]. Strategic Developments - The acquisition of Swedish Electromagnet Invest AB (SEM) for approximately $47 million was completed, enhancing PHINIA's capabilities in alternative fuel ignition systems [4][5]. - New business wins included contracts with leading OEMs in North America and Asia, expanding PHINIA's market presence [4][5]. Balance Sheet and Cash Flow - The company ended the quarter with cash and cash equivalents of $349 million and total debt of $992 million [6][7]. - Net cash generated by operating activities was $119 million, a year-over-year increase of $24 million, while adjusted free cash flow was $104 million compared to $60 million in Q3 2024 [7][30]. 2025 Full Year Guidance - PHINIA updated its full-year guidance, projecting net sales between $3.39 billion and $3.45 billion, with net earnings expected to be $100 million to $110 million [8]. - Adjusted EBITDA is projected to be between $465 million and $480 million, with an adjusted free cash flow forecast of $175 million to $205 million [8].

Core Viewpoint - PHINIA Inc. will participate in Gabelli's 49th Annual Automotive Symposium on November 4, 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] - PHINIA's President and CEO, Brady Ericson, will engage in the Q&A session alongside Gabelli's Brian Sponheimer [1] Industry Dynamics - The event will provide insights into the automotive industry dynamics [1] - The discussion will likely cover trends and challenges facing the automotive sector [1]

Core Insights - PHINIA Inc. is expected to release its third-quarter 2025 results on October 28, with consensus estimates for earnings per share (EPS) at $1.17 and revenues at $868.8 million [1][7] - The earnings estimate has increased by 12 cents over the past 90 days, indicating no change from the previous year's reported numbers [1][2] - The projected revenue growth of 3.55% year-over-year reflects a positive trend for the company [2] Financial Performance - In Q2 2025, PHINIA reported an adjusted EPS of $1.27, surpassing the Zacks Consensus Estimate of 99 cents, and an increase from 88 cents in the same quarter last year [2] - The company achieved net sales of $890 million in Q2, exceeding the Zacks Consensus Estimate of $844 million, with a year-over-year increase of 2.5% [2] Market Trends - The average age of U.S. light vehicles has risen to approximately 12.8 years, which is expected to positively impact PHINIA's aftermarket parts segment [3] - The anticipated increase in aftermarket parts sales is likely to contribute to the company's revenue growth in Q3 [3] Margin Considerations - Tariff-related revenues, which have zero margin, are expected to slightly reduce overall margin percentages [4] - For the full year 2025, PHINIA projects adjusted EBITDA between $455 million and $485 million, indicating a decrease in margin guidance from the previous range [4] Earnings Prediction - The current model does not predict a definitive earnings beat for PHINIA, as it lacks the necessary combination of positive Earnings ESP and a favorable Zacks Rank [5][6] - PHINIA has an Earnings ESP of +4.70%, with the Most Accurate Estimate being higher than the Zacks Consensus Estimate [6]

Core Insights - Heartland Advisors reported a strong performance for small-cap stocks in Q3 2025, with the Russell 2000® Index increasing by 12.39%, outperforming the S&P 500 Index's 8.12% rise [1] - The Heartland Value Plus Fund achieved an 8.51% return in Q3 2025, lagging behind the Russell 2000® Value Index, which gained 12.60% [1] Company Highlights - PHINIA Inc. (NYSE:PHIN), a spin-off from BorgWarner, focuses on developing integrated components and systems for vehicles and industrial applications, aiming to enhance performance and reduce emissions [2] - PHINIA Inc. experienced a one-month return of -9.93%, but its shares increased by 13.30% over the past 52 weeks, closing at $51.78 on October 10, 2025, with a market capitalization of $2.014 billion [2] Investment Strategy - The Heartland Value Plus Fund emphasized that stock selection is most effective when management actions confirm improving fundamentals, such as share buybacks, insider buying, and growing dividends [3] - Currently, approximately one-third of the fund's holdings have insider buying, 84% of the companies are engaged in active buybacks, and 61% have raised dividends in the past year [3]