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]

Market Overview - The stock market is reaching new all-time highs, driven by increased spending in the artificial intelligence sector as investors aim to capitalize on potential gains [1] - Historical data indicates that buying stocks at or near all-time highs can be beneficial, with the S&P 500 averaging a 12-month price return of 9.1% after reaching such highs [2] Stock Performance - Approximately 200 S&P 500 stocks are currently underperforming, suggesting that investors should focus on stocks that are also achieving new peaks [3] - A screening method has been developed to identify Zacks Rank 1 (Strong Buy) stocks with upward price momentum, trading within 20% of their 52-week highs [5] Featured Stock: PHINIA Inc. - PHINIA Inc. (PHIN) is highlighted as a strong buy, specializing in premium fuel systems and electrical systems for the automotive industry [6][8] - The company is expanding its portfolio through the acquisition of Electromagnet Invest AB for approximately $47 million, aimed at enhancing its capabilities in alternative fuel systems [10] Financial Performance - PHINIA exceeded Q2 earnings per share (EPS) estimates by 28% and has seen upward revisions in its EPS estimates for Q3 and FY25, earning a Zacks Rank 1 [11] - The stock has appreciated 130% over the past two years, significantly outperforming its sector and the S&P 500 [12]

Group 1 - PHINIA's leadership, including President and CEO Brady Ericson and CFO Chris Gropp, is focused on growth outlook, market development, and capital allocation strategy [1] - The company is viewed positively by auto analysts, with a strong portfolio and balance sheet, indicating opportunities for business improvement and valuation enhancement [2] - Automotive sector contributes 27% to PHINIA's total revenues, with expectations of a decline over time, while the aftermarket segment is thriving [3]

Summary of PHINIA FY Conference Call - September 11, 2025 Company Overview - **Company**: PHINIA (NYSE:PHIN) - **Industry**: Automotive and Aerospace Components Key Points and Arguments Market Position and Revenue Diversification - PHINIA's revenue from the automotive sector is currently 27% and is expected to decline over time, with a strong performance in the aftermarket segment [5][6] - The company emphasizes its diversified business model, which includes regional and customer diversity, mitigating risks from specific market downturns [6][7] - Aftermarket business constitutes 34% of total revenues, providing stable cash flow during downturns in original equipment manufacturing (OEM) [22] New Market Opportunities - PHINIA is entering new markets such as aerospace and off-highway applications, leveraging existing manufacturing capabilities without significant new capital expenditures [9][10] - The total addressable market for aerospace and off-highway applications is estimated to be as large as the commercial vehicle business globally, indicating substantial growth potential [14][15] - The company anticipates that new markets will contribute mid to high single digits to total revenue by the end of the decade [14] Capital Allocation Strategy - PHINIA has been actively buying back shares, having repurchased close to 20% of its shares since spinning off, as it believes its stock is undervalued [19][20] - The company plans to maintain a conservative capital allocation strategy, focusing on organic growth while remaining open to acquisitions if they align with valuation metrics [20][37] - Free cash flow generation is expected to improve in the second half of the year, with a target of $160 million [37] Industry Trends and Challenges - The commercial vehicle market is currently facing challenges, with low build rates and freight demand impacting growth [33][34] - The company does not foresee a significant pre-buy before the 2027 emissions regulations, indicating a cautious outlook for the near term [35] - PHINIA's engineering spend is primarily focused on application engineering, allowing for flexibility in adapting existing technologies to new markets [17] Technological Advancements - PHINIA is focusing on multi-fuel technology for fuel injectors, adapting to various fuel types as the market evolves [59][62] - The company is investing in AI and automation to enhance production efficiencies and reduce costs, with a focus on targeted projects that deliver value [43][44] Future Outlook - The transition to hydrogen and other alternative fuels is expected to take decades, with meaningful revenue contributions anticipated in the 2030s [80] - PHINIA is optimistic about the long-term viability of combustion engines, projecting their continued relevance in transportation for the foreseeable future [62] Competitive Landscape - The company identifies peers such as Allison Transmission, Timken, and Donaldson Company as relevant comparables in the industrial and aftermarket space [97][102] Additional Important Insights - PHINIA's aftermarket segment is seen as a stabilizing force during market volatility, with a strong brand reputation aiding growth [22][23] - The company is strategically positioned to adapt to changing market demands, including shifts towards cleaner fuels and technologies [86][88] - PHINIA's entry into aerospace is driven by both market demand and its existing technological capabilities, indicating a proactive approach to growth [93][94]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Phinia (PHIN) - Phinia currently holds a Momentum Style Score of B and a Zacks Rank of 1 (Strong Buy), indicating strong potential for outperformance [2][3] - The stock has shown a price increase of 0.21% over the past week, while the Zacks Automotive - Original Equipment industry remained flat during the same period [5] - Over the past quarter, Phinia's shares have increased by 37.45%, and by 27.17% over the last year, significantly outperforming the S&P 500, which moved 8.64% and 21.49% respectively [6] Trading Volume - Phinia's average 20-day trading volume is 377,793 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, three earnings estimates for Phinia have been revised upwards, increasing the consensus estimate from $4.17 to $4.56 [9] - For the next fiscal year, three estimates have also moved upwards with no downward revisions, indicating positive sentiment [9] Conclusion - Given the strong performance metrics and positive earnings outlook, Phinia is positioned as a solid momentum pick with a 1 (Strong Buy) rating and a Momentum Score of B [11]