Core Viewpoint - Investors are evaluating the value opportunities presented by Phinia (PHIN) and Modine (MOD) in the Automotive - Original Equipment sector, with a focus on which stock offers better value at the current time [1] Valuation Metrics - Both PHIN and MOD currently hold a Zacks Rank of 1 (Strong Buy), indicating positive revisions to their earnings estimates and improving earnings outlooks [3] - PHIN has a forward P/E ratio of 11.26, significantly lower than MOD's forward P/E of 29.92, suggesting that PHIN may be undervalued [5] - The PEG ratio for PHIN is 0.46, while MOD's PEG ratio is 0.88, indicating that PHIN has a more favorable valuation relative to its expected earnings growth [5] - PHIN's P/B ratio is 1.18, compared to MOD's P/B ratio of 7.14, further supporting the notion that PHIN is the more attractive value option [6] Value Grades - Based on various valuation metrics, PHIN holds a Value grade of A, while MOD has a Value grade of C, indicating that PHIN is perceived as the superior value investment at this time [6]

For Phinia, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: 12 Month EPS Current-Quarter Estimate Revisions Investors might want to bet on Phinia (PHIN) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price mom ...

One other Auto-Tires-Trucks stock that has outperformed the sector so far this year is QuantumScape Corporation (QS) . The stock is up 111.6% year-to-date. In QuantumScape Corporation's case, the consensus EPS estimate for the current year increased 3.5% over the past three months. The stock currently has a Zacks Rank #2 (Buy). Looking more specifically, Phinia belongs to the Automotive - Original Equipment industry, a group that includes 50 individual stocks and currently sits at #74 in the Zacks Industry ...

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell even higher, with the expectation that established trends will continue [1] Company Summary: Phinia (PHIN) - Phinia currently holds a Momentum Style Score of B, indicating a positive outlook based on price changes and earnings estimate revisions [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting strong potential for outperformance in the market [3] - Over the past week, PHIN shares increased by 0.06%, while the Zacks Automotive - Original Equipment industry remained flat [5] - In a longer timeframe, PHIN's shares have risen by 17.5% over the past month, outperforming the industry's 6.38% [5] - Over the last quarter, PHIN shares increased by 29.51%, and over the past year, they gained 21.54%, compared to the S&P 500's increases of 16.04% and 19.71%, respectively [6] - The average 20-day trading volume for PHIN is 418,783 shares, indicating a bullish sign with rising stock prices [7] Earnings Outlook - Recent earnings estimate revisions for PHIN show 2 estimates moving higher and none lower, increasing the consensus estimate from $4.04 to $4.18 over the past 60 days [9] - For the next fiscal year, 2 estimates have also moved upwards with no downward revisions, indicating a positive earnings outlook [9] Conclusion - Considering the positive momentum indicators and earnings outlook, PHIN is positioned as a 1 (Strong Buy) stock with a Momentum Score of B, making it a strong candidate for near-term investment [10][11]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Characteristics - Fast-moving trending stocks can be difficult to enter at the right time, as they may lose momentum if future growth does not justify their high valuations [2] - Investing in bargain stocks that have recently shown price momentum can be a safer strategy [3] Group 2: Phinia (PHIN) Stock Analysis - Phinia (PHIN) has shown a price increase of 17.3% over the past four weeks, indicating growing investor interest [4] - Over the past 12 weeks, PHIN's stock gained 25%, with a beta of 1.49, suggesting it moves 49% more than the market [5] - PHIN has a Momentum Score of B, indicating a favorable time to invest based on momentum [6] - The stock has a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates, which attract more investors [7] - PHIN is trading at a Price-to-Sales ratio of 0.62, suggesting it is undervalued at 62 cents for each dollar of sales [7] Group 3: Investment Opportunities - PHIN appears to have significant potential for growth, and there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen [8] - Various Zacks Premium Screens are available to help identify winning stock picks based on different investing styles [9]

Core Insights - Phinia (PHIN) reported $890 million in revenue for the quarter ended June 2025, marking a year-over-year increase of 2.5% and exceeding the Zacks Consensus Estimate of $843.87 million by 5.47% [1] - The company achieved an EPS of $1.27, up from $0.88 a year ago, resulting in an EPS surprise of 28.28% compared to the consensus estimate of $0.99 [1] Financial Performance - Phinia's shares have returned +12.3% over the past month, outperforming the Zacks S&P 500 composite's +5.7% change, indicating strong market performance [3] - The company holds a Zacks Rank 2 (Buy), suggesting potential for continued outperformance in the near term [3] Geographic Revenue Breakdown - Revenue from the Americas was $369 million, closely aligning with the two-analyst average estimate of $369.74 million [4] - Revenue from Europe reached $367 million, surpassing the two-analyst average estimate of $345.34 million [4] - Revenue from Asia totaled $154 million, exceeding the two-analyst average estimate of $128.37 million [4]

PART I. Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company presents its unaudited condensed consolidated financial statements and accompanying notes for the periods ended June 30, 2025 and 2024 [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Total assets grew to $3,894 million, driven by increases in receivables, inventories, and goodwill Balance Sheet Summary | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Total assets | $3,894 | $3,768 | +$126 | +3.3% | | Total liabilities | $2,267 | $2,194 | +$73 | +3.3% | | Total equity | $1,627 | $1,574 | +$53 | +3.4% | | Cash and cash equivalents | $347 | $484 | -$137 | -28.3% | | Receivables, net | $905 | $817 | +$88 | +10.8% | | Inventories | $501 | $444 | +$57 | +12.8% | | Goodwill | $505 | $471 | +$34 | +7.2% | | Retained earnings | $95 | $44 | +$51 | +115.9% | | Accumulated other comprehensive loss | $(76) | $(217) | +$141 | -64.9% | | Treasury stock | $(367) | $(230) | -$137 | +59.6% | [Condensed Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Quarterly net earnings surged to $46 million on higher sales, while six-month earnings grew despite a slight sales decline Three-Month Operational Performance | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | | Net sales ($ in millions) | $890 | $868 | +$22 | +2.5% | | Gross profit ($ in millions) | $197 | $188 | +$9 | +4.8% | | Operating income ($ in millions) | $89 | $71 | +$18 | +25.4% | | Earnings before income taxes ($ in millions) | $75 | $37 | +$38 | +102.7% | | Net earnings ($ in millions) | $46 | $14 | +$32 | +228.6% | | Basic EPS ($) | $1.16 | $0.31 | +$0.85 | +274.2% | | Diluted EPS ($) | $1.14 | $0.31 | +$0.83 | +267.7% | Six-Month Operational Performance | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net sales ($ in millions) | $1,686 | $1,731 | -$45 | -2.6% | | Gross profit ($ in millions) | $369 | $380 | -$11 | -2.9% | | Operating income ($ in millions) | $151 | $142 | +$9 | +6.3% | | Earnings before income taxes ($ in millions) | $125 | $93 | +$32 | +34.4% | | Net earnings ($ in millions) | $72 | $43 | +$29 | +67.4% | | Basic EPS ($) | $1.80 | $0.95 | +$0.85 | +89.5% | | Diluted EPS ($) | $1.76 | $0.93 | +$0.83 | +89.2% | [Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(Unaudited)) Comprehensive income significantly improved to $136 million for the quarter, driven by positive foreign currency adjustments Comprehensive Income (Loss) Summary | Metric | Three Months Ended June 30, 2025 ($ in millions) | Three Months Ended June 30, 2024 ($ in millions) | Six Months Ended June 30, 2025 ($ in millions) | Six Months Ended June 30, 2024 ($ in millions) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net earnings | $46 | $14 | $72 | $43 | | Foreign currency translation adjustments | $91 | $(18) | $143 | $(39) | | Defined benefit pension plans | $(2) | $(1) | $(3) | $(2) | | Hedge instruments | $1 | $0 | $1 | $0 | | Total other comprehensive income (loss) | $90 | $(19) | $141 | $(41) | | Comprehensive income (loss) | $136 | $(5) | $213 | $2 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Operating cash flow decreased to $97 million due to working capital needs, while financing and investing cash usage increased Six-Month Cash Flow Summary | Activity | Six Months Ended June 30, 2025 ($ in millions) | Six Months Ended June 30, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------- | :--------- | | Net cash provided by operating activities | $97 | $140 | -$43 | -30.7% | | Net cash used in investing activities | $(68) | $(59) | -$9 | +15.3% | | Net cash used in financing activities | $(169) | $(126) | -$43 | +34.1% | | Net decrease in cash and cash equivalents | $(137) | $(26) | -$111 | +426.9% | | Cash and cash equivalents at end of period | $347 | $339 | +$8 | +2.4% | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail accounting policies and provide breakdowns for key financial statement line items for the reported periods [Introduction](index=7&type=section&id=Introduction_Notes) - PHINIA is a global leader in developing, designing, and manufacturing integrated components and systems for combustion and hybrid propulsion systems across commercial, industrial, light commercial, and light passenger vehicles, also providing OES solutions and remanufactured products for the independent aftermarket[20](index=20&type=chunk) - PHINIA became an independent publicly-traded company on **July 3, 2023**, following a spin-off from BorgWarner Inc[21](index=21&type=chunk) [NOTE 1 BASIS OF PRESENTATION](index=7&type=section&id=NOTE%201%20BASIS%20OF%20PRESENTATION) - The Company adopted **ASU 2023-07, "Segment Reporting,"** effective for interim periods beginning after December 15, 2024, to improve reportable segment disclosures[24](index=24&type=chunk)[25](index=25&type=chunk) - The Company will adopt **ASU 2023-09, "Income Taxes,"** effective for annual periods beginning after December 15, 2024, requiring disaggregated information on effective tax rate reconciliation and income taxes paid[26](index=26&type=chunk) - The Company will adopt **ASUs 2024-03 and 2025-01, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,"** effective for annual periods beginning after December 15, 2026, which will result in additional disclosures but no material impact on financial statements[27](index=27&type=chunk) [NOTE 2 REVENUE FROM CONTRACTS WITH CUSTOMERS](index=8&type=section&id=NOTE%202%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Contract Liabilities | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :----------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Total contract liabilities | $14 | $7 | +$7 | +100.0% | | Current portion | $5 | $3 | +$2 | +66.7% | | Non-current portion | $9 | $4 | +$5 | +125.0% | Net Sales by Segment and Region (Three Months Ended June 30) | Region | Fuel Systems (2025) ($ in millions) | Aftermarket (2025) ($ in millions) | Total (2025) ($ in millions) | Fuel Systems (2024) ($ in millions) | Aftermarket (2024) ($ in millions) | Total (2024) ($ in millions) | | :------- | :---------------------------------- | :--------------------------------- | :--------------------------- | :---------------------------------- | :--------------------------------- | :--------------------------- | | Americas | $184 | $185 | $369 | $177 | $192 | $369 | | Europe | $218 | $149 | $367 | $227 | $137 | $364 | | Asia | $135 | $19 | $154 | $114 | $21 | $135 | | **Total** | **$537** | **$353** | **$890** | **$518** | **$350** | **$868** | Net Sales by Segment and Region (Six Months Ended June 30) | Region | Fuel Systems (2025) ($ in millions) | Aftermarket (2025) ($ in millions) | Total (2025) ($ in millions) | Fuel Systems (2024) ($ in millions) | Aftermarket (2024) ($ in millions) | Total (2024) ($ in millions) | | :------- | :---------------------------------- | :--------------------------------- | :--------------------------- | :---------------------------------- | :--------------------------------- | :--------------------------- | | Americas | $361 | $364 | $725 | $364 | $384 | $748 | | Europe | $408 | $276 | $684 | $454 | $262 | $716 | | Asia | $241 | $36 | $277 | $227 | $40 | $267 | | **Total** | **$1,010** | **$676** | **$1,686** | **$1,045** | **$686** | **$1,731** | [NOTE 3 RESEARCH AND DEVELOPMENT COSTS](index=9&type=section&id=NOTE%203%20RESEARCH%20AND%20DEVELOPMENT%20COSTS) R&D Costs Summary | Metric | Three Months Ended June 30, 2025 ($ in millions) | Three Months Ended June 30, 2024 ($ in millions) | Six Months Ended June 30, 2025 ($ in millions) | Six Months Ended June 30, 2024 ($ in millions) | | :-------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Gross R&D costs | $46 | $52 | $92 | $104 | | Customer reimbursements | $(16) | $(22) | $(34) | $(47) | | Net R&D costs | $30 | $30 | $58 | $57 | | Net R&D as % of net sales | 3.4% | 3.5% | 3.4% | 3.3% | [NOTE 4 OTHER OPERATING (INCOME) EXPENSE, NET](index=10&type=section&id=NOTE%204%20OTHER%20OPERATING%20(INCOME)%20EXPENSE%2C%20NET) Other Operating (Income) Expense Breakdown | Metric | Three Months Ended June 30, 2025 ($ in millions) | Three Months Ended June 30, 2024 ($ in millions) | Six Months Ended June 30, 2025 ($ in millions) | Six Months Ended June 30, 2024 ($ in millions) | | :-------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Restructuring | $2 | $3 | $7 | $5 | | Transaction-related (benefits) costs | $(4) | $3 | $(5) | $20 | | Other operating income, net | $(2) | $(1) | $(3) | $(3) | | **Total** | **$(4)** | **$5** | **$(1)** | **$22** | - Transaction-related benefits for Q2 2025 included an **$11 million benefit** from Tax Matters Agreement indemnities, offset by $5 million in Spin-Off costs and $2 million for strategic acquisition initiatives[36](index=36&type=chunk) - The Company announced the acquisition of Swedish Electromagnet Invest AB (SEM) for approximately **$47 million**, expected to close in Q3 2025[37](index=37&type=chunk) [NOTE 5 INCOME TAXES](index=11&type=section&id=NOTE%205%20INCOME%20TAXES) Effective Tax Rate | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30 | 39% | 62% | | Six Months Ended June 30 | 42% | 54% | - The decrease in effective tax rate was primarily due to a **change in the jurisdictional mix of pre-tax earnings**, partially offset by an increase in uncertain tax position reserves related to pre-Spin-Off periods[40](index=40&type=chunk)[41](index=41&type=chunk) - The Company provisionally calculated additional top-up tax under the **Pillar 2 Framework** in certain jurisdictions, which is not significant to the total 2025 income tax provision[43](index=43&type=chunk) - The Company is currently assessing the impact of the recently enacted **One Big Beautiful Bill Act (OBBBA)** on its consolidated financial statements[44](index=44&type=chunk) [NOTE 6 RECEIVABLES, NET](index=12&type=section&id=NOTE%206%20RECEIVABLES%2C%20NET) Receivables Breakdown | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Customers | $666 | $574 | +$92 | +16.0% | | Indirect taxes | $110 | $119 | -$9 | -7.6% | | Due from Former Parent | $85 | $80 | +$5 | +6.3% | | Other | $52 | $53 | -$1 | -1.9% | | Gross receivables | $913 | $826 | +$87 | +10.5% | | Allowance for credit losses | $(8) | $(9) | +$1 | -11.1% | | **Total receivables, net** | **$905** | **$817** | **+$88** | **+10.8%** | [NOTE 7 INVENTORIES](index=12&type=section&id=NOTE%207%20INVENTORIES) Inventory Breakdown | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Raw material and supplies | $250 | $234 | +$16 | +6.8% | | Work-in-progress | $50 | $40 | +$10 | +25.0% | | Finished goods | $201 | $170 | +$31 | +18.2% | | **Total Inventories** | **$501** | **$444** | **+$57** | **+12.8%** | [NOTE 8 OTHER CURRENT AND NON-CURRENT ASSETS](index=13&type=section&id=NOTE%208%20OTHER%20CURRENT%20AND%20NON-CURRENT%20ASSETS) Prepayments and Other Current Assets | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Prepaid taxes | $37 | $32 | +$5 | +15.6% | | Prepaid customer tooling | $24 | $14 | +$10 | +71.4% | | Derivative instruments | $5 | $0 | +$5 | N/A | | **Total prepayments and other current assets** | **$119** | **$96** | **+$23** | **+24.0%** | Investments and Long-Term Receivables | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Long-term receivables | $59 | $52 | +$7 | +13.5% | | Investment in equity affiliates | $59 | $51 | +$8 | +15.7% | | **Total investments and long-term receivables** | **$126** | **$111** | **+$15** | **+13.5%** | [NOTE 9 GOODWILL AND OTHER INTANGIBLES](index=13&type=section&id=NOTE%209%20GOODWILL%20AND%20OTHER%20INTANGIBLES) Goodwill by Segment | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Net goodwill balance | $505 | $471 | +$34 | +7.2% | | Fuel Systems goodwill | $68 | $60 | +$8 | +13.3% | | Aftermarket goodwill | $437 | $411 | +$26 | +6.3% | | Translation adjustment | $34 | N/A | +$34 | N/A | Other Intangible Assets | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Total amortized intangible assets, net | $236 | $234 | +$2 | +0.9% | | Unamortized trade names, net | $151 | $140 | +$11 | +7.9% | | **Total other intangible assets, net** | **$387** | **$374** | **+$13** | **+3.5%** | [NOTE 10 PRODUCT WARRANTY](index=14&type=section&id=NOTE%2010%20PRODUCT%20WARRANTY) Product Warranty Liability Roll-Forward | Metric | Six Months Ended June 30, 2025 ($ in millions) | Six Months Ended June 30, 2024 ($ in millions) | | :------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Beginning balance, January 1 | $61 | $56 | | Provisions for current period sales | $24 | $18 | | Payments | $(22) | $(20) | | Other, primarily translation adjustment | $3 | $(1) | | **Ending balance, June 30** | **$66** | **$53** | Product Warranty Liability Breakdown | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | | :-------------------------- | :---------------------------- | :-------------------------------- | | Other current liabilities | $34 | $36 | | Other non-current liabilities | $32 | $25 | | **Total product warranty liability** | **$66** | **$61** | [NOTE 11 NOTES PAYABLE AND DEBT](index=15&type=section&id=NOTE%2011%20NOTES%20PAYABLE%20AND%20DEBT) Long-Term Debt | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | | :-------------------------------- | :---------------------------- | :-------------------------------- | | 5.000% Senior Notes due 10/01/25 | $24 | $24 | | 6.750% Senior Notes due 04/15/29 | $519 | $518 | | 6.625% Senior Notes due 10/15/32 | $444 | $444 | | Finance leases | $3 | $2 | | **Total long-term debt** | **$990** | **$988** | - The Company had **$499 million available** under its $500 million revolving credit facility as of June 30, 2025, and was in compliance with all debt covenants[56](index=56&type=chunk) [NOTE 12 OTHER CURRENT AND NON-CURRENT LIABILITIES](index=16&type=section&id=NOTE%2012%20OTHER%20CURRENT%20AND%20NON-CURRENT%20LIABILITIES) Other Current Liabilities | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Payroll and employee related | $86 | $106 | -$20 | -18.9% | | Customer related | $85 | $98 | -$13 | -13.3% | | Uncertain tax positions | $16 | $7 | +$9 | +128.6% | | **Total other current liabilities** | **$409** | **$422** | **-$13** | **-3.1%** | Other Non-Current Liabilities | Metric | June 30, 2025 ($ in millions) | December 31, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------- | :---------------------------- | :-------------------------------- | :--------------------- | :--------- | | Product warranties | $32 | $25 | +$7 | +28.0% | | Uncertain tax positions | $22 | $8 | +$14 | +175.0% | | **Total other non-current liabilities** | **$173** | **$150** | **+$23** | **+15.3%** | [NOTE 13 FINANCIAL INSTRUMENTS](index=16&type=section&id=NOTE%2013%20FINANCIAL%20INSTRUMENTS) - Outstanding currency derivative instruments for foreign currency cash flow hedging had a USD equivalent notional value of **$97 million** at June 30, 2025, primarily Euro-denominated forward contracts[60](index=60&type=chunk) - Derivative instruments designated as foreign currency cash flow hedges recognized a **$1 million gain** in Accumulated other comprehensive loss (AOCI) for both the three and six months ended June 30, 2025[61](index=61&type=chunk) - A **$100 million notional value** Chinese Yuan (CNY), United States Dollar (USD) fixed rate cross currency swap, not designated as a hedging instrument, resulted in a gain of $2 million for the three months and $1 million for the six months ended June 30, 2025[64](index=64&type=chunk) [NOTE 14 RETIREMENT BENEFIT PLANS](index=18&type=section&id=NOTE%2014%20RETIREMENT%20BENEFIT%20PLANS) Net Periodic Benefit Cost | Metric | Three Months Ended June 30, 2025 ($ in millions) | Three Months Ended June 30, 2024 ($ in millions) | Six Months Ended June 30, 2025 ($ in millions) | Six Months Ended June 30, 2024 ($ in millions) | | :-------------------- | :----------------------------------------------- | :----------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Service cost | $1 | $1 | $2 | $2 | | Interest cost | $12 | $12 | $23 | $23 | | Expected return on plan assets | $(11) | $(11) | $(21) | $(21) | | Amortization of unrecognized loss | $0 | $0 | $0 | $(1) | | **Net periodic benefit cost** | **$2** | **$2** | **$4** | **$3** | - Estimated contributions to defined benefit pension plans for 2025 are between **$5 million and $9 million**, with $2 million contributed in the first six months[65](index=65&type=chunk) [NOTE 15 STOCKHOLDERS' EQUITY](index=18&type=section&id=NOTE%2015%20STOCKHOLDERS'%20EQUITY) Stockholders' Equity Roll-Forward | Metric | Amount ($ in millions) | | :-------------------------------- | :--------------------- | | Balance, December 31, 2024 | $1,574 | | Dividends declared | $(21) | | Stock-based compensation expense | $8 | | Purchase of treasury stock | $(140) | | Excise tax on purchase of treasury stock | $(1) | | Net issuance of executive stock plan | $(6) | | Net earnings | $72 | | Other comprehensive income | $141 | | **Balance, June 30, 2025** | **$1,627** | [NOTE 16 ACCUMULATED OTHER COMPREHENSIVE LOSS](index=21&type=section&id=NOTE%2016%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) AOCI Roll-Forward | Metric | Six Months Ended June 30, 2025 ($ in millions) | Six Months Ended June 30, 2024 ($ in millions) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Beginning Balance, December 31 | $(217) | $(131) | | Comprehensive income (loss) before reclassifications | $141 | $(42) | | Income taxes associated with comprehensive income | $(1) | $0 | | Reclassification from accumulated other comprehensive loss | $1 | $1 | | **Ending Balance, June 30** | **$(76)** | **$(172)** | [NOTE 17 CONTINGENCIES](index=21&type=section&id=NOTE%2017%20CONTINGENCIES) - The Company is involved in a legal dispute with **BorgWarner Inc. (Former Parent)** concerning the obligation to remit tax refunds related to indirect tax payments made prior to the Spin-Off[76](index=76&type=chunk) - The Delaware Superior Court **denied the Former Parent's motion to dismiss** the Company's counterclaims on April 10, 2025[76](index=76&type=chunk) - While the Company believes its arguments are meritorious, the ultimate outcome is uncertain, and a **material adverse effect** on financial position, results of operations, and/or cash flows is reasonably possible, though not probable[76](index=76&type=chunk) [NOTE 18 EARNINGS PER SHARE](index=22&type=section&id=NOTE%2018%20EARNINGS%20PER%20SHARE) Earnings Per Share (EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS ($) | $1.16 | $0.31 | $1.80 | $0.95 | | Diluted EPS ($) | $1.14 | $0.31 | $1.76 | $0.93 | | Weighted average shares outstanding (Basic, in millions) | 39.5 | 44.8 | 40.1 | 45.5 | | Weighted average shares outstanding (Diluted, in millions) | 40.2 | 45.7 | 40.8 | 46.1 | Adjusted Earnings Per Share (Non-GAAP) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Adjusted net earnings per diluted share ($) | $1.27 | $0.88 | $2.21 | $1.98 | [NOTE 19 REPORTABLE SEGMENTS AND RELATED INFORMATION](index=23&type=section&id=NOTE%2019%20REPORTABLE%20SEGMENTS%20AND%20RELATED%20INFORMATION) - PHINIA's two reportable segments are **Fuel Systems and Aftermarket**, with Segment Adjusted Operating Income (AOI) used as the primary measure of segment performance[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - Corporate expenses not allocated to Segment AOI increased to **$25 million (Q2 2025)** from $21 million (Q2 2024) and to **$49 million (H1 2025)** from $39 million (H1 2024), primarily due to foreign exchange losses and additional performance stock units[124](index=124&type=chunk)[144](index=144&type=chunk) Segment Performance (Three Months Ended June 30) | Segment | Net Sales (2025) ($ in millions) | Segment AOI (2025) ($ in millions) | % Margin (2025) | Net Sales (2024) ($ in millions) | Segment AOI (2024) ($ in millions) | % Margin (2024) | | :---------- | :------------------------------- | :--------------------------------- | :-------------- | :------------------------------- | :--------------------------------- | :-------------- | | Fuel Systems | $537 | $62 | 11.5% | $518 | $52 | 10.0% | | Aftermarket | $353 | $57 | 16.1% | $350 | $53 | 15.1% | | **Totals** | **$890** | **$119** | | **$868** | **$105** | | Segment Performance (Six Months Ended June 30) | Segment | Net Sales (2025) ($ in millions) | Segment AOI (2025) ($ in millions) | % Margin (2025) | Net Sales (2024) ($ in millions) | Segment AOI (2024) ($ in millions) | % Margin (2024) | | :---------- | :------------------------------- | :--------------------------------- | :-------------- | :------------------------------- | :--------------------------------- | :-------------- | | Fuel Systems | $1,010 | $107 | 10.6% | $1,045 | $107 | 10.2% | | Aftermarket | $676 | $109 | 16.1% | $686 | $113 | 16.5% | | **Totals** | **$1,686** | **$216** | | **$1,731** | **$220** | | [NOTE 20 OPERATING CASH FLOW AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION](index=28&type=section&id=NOTE%2020%20OPERATING%20CASH%20FLOW%20AND%20OTHER%20SUPPLEMENTAL%20FINANCIAL%20INFORMATION) Operating Cash Flow | Metric | Six Months Ended June 30, 2025 ($ in millions) | Six Months Ended June 30, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------- | :--------- | | Net cash provided by operating activities | $97 | $140 | -$43 | -30.7% | Supplemental Cash Flow Information | Metric | Six Months Ended June 30, 2025 ($ in millions) | Six Months Ended June 30, 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------------------- | :--------- | | Cash paid for Interest, net | $29 | $17 | +$12 | +70.6% | | Cash paid for Income taxes, net of refunds | $40 | $27 | +$13 | +48.1% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operational results, liquidity, and market outlook for the periods ended June 30, 2025 [Introduction](index=31&type=section&id=Introduction_MD&A) - PHINIA is a global leader in components and systems for combustion and hybrid propulsion, serving OEMs and the aftermarket[97](index=97&type=chunk) - The company became an independent publicly-traded entity on **July 3, 2023**, following a spin-off from BorgWarner Inc[98](index=98&type=chunk) - PHINIA announced the acquisition of Swedish Electromagnet Invest AB (SEM) for approximately **$47 million**, expected to close in Q3 2025, which is projected to generate $50 million in annual revenue and $10 million in annual adjusted EBITDA[99](index=99&type=chunk) [Key Trends and Economic Factors](index=31&type=section&id=Key%20Trends%20and%20Economic%20Factors) - Commodity prices remain volatile, with base metal prices stabilizing in 2025 compared to 2024[100](index=100&type=chunk) - New trade restrictions, export controls, and increased tariffs could **materially impact business** by increasing input costs and decreasing demand in CV and LV markets, particularly in Mexico and China[100](index=100&type=chunk)[102](index=102&type=chunk) [Outlook](index=31&type=section&id=Outlook) - Earnings and cash generation in 2025 are expected to be challenged by **softening original equipment markets**[101](index=101&type=chunk) - Light Vehicle (LV) volumes in key markets are expected to **decline by mid-single digit percentages** in 2025[101](index=101&type=chunk) - Commercial Vehicle (CV) volumes in key markets are expected to **decline by low-single digit percentages** in 2025[101](index=101&type=chunk) - Long-term growth drivers include market share expansion in CV, growth in vehicle parc supporting aftermarket demand, increased consumer interest in hybrid/plug-in vehicles, and adoption of zero/lower-carbon fuel solutions[103](index=103&type=chunk) [Use of Non-GAAP Financial Measures](index=32&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) - Non-GAAP financial measures are used to provide additional insights into the Company's business and operating performance, and for operational planning and decision-making[104](index=104&type=chunk)[105](index=105&type=chunk) - Non-GAAP measures are reconciled to their most directly comparable GAAP financial measures and should not be considered a substitute for GAAP[104](index=104&type=chunk)[106](index=106&type=chunk) [Results of Operations (Three Months Ended June 30, 2025 vs. 2024)](index=33&type=section&id=Results%20of%20Operations%20(Three%20Months%20Ended%20June%2030%2C%202025%20vs.%202024)) Net sales increased by 2.5% to $890 million, while net earnings surged by 228.6% to $46 million, benefiting from lower interest expense and transaction-related benefits Q2 Operational Performance Summary | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------------- | :------------------- | :------------------- | :--------------------- | :--------- | | Net sales | $890 | $868 | +$22 | +2.5% | | Cost of sales | $693 | $680 | +$13 | +1.9% | | Gross profit | $197 | $188 | +$9 | +4.8% | | Operating income | $89 | $71 | +$18 | +25.4% | | Net earnings | $46 | $14 | +$32 | +228.6% | - Net sales increase was primarily driven by **positive foreign currency impacts** and supplier savings, partially offset by the end of contract manufacturing agreements and unfavorable tariff impacts[109](index=109&type=chunk) - Interest expense **decreased significantly from $39 million to $21 million**, primarily due to the loss on extinguishment from debt restructuring in the prior period[117](index=117&type=chunk) - Other operating (income) expense, net, shifted from a **$5 million expense to a $4 million income**, mainly due to a decrease in transaction-related costs, particularly adjustments under the Tax Matters Agreement[113](index=113&type=chunk)[114](index=114&type=chunk) [Results of Operations (Six Months Ended June 30, 2025 vs. 2024)](index=38&type=section&id=Results%20of%20Operations%20(Six%20Months%20Ended%20June%2030%2C%202025%20vs.%202024)) Net sales decreased by 2.6% to $1,686 million, but net earnings rose by 67.4% to $72 million, driven by reduced interest and other operating expenses H1 Operational Performance Summary | Metric | 2025 ($ in millions) | 2024 ($ in millions) | Change ($ in millions) | Change (%) | | :-------------------------------- | :------------------- | :------------------- | :--------------------- | :--------- | | Net sales | $1,686 | $1,731 | -$45 | -2.6% | | Cost of sales | $1,317 | $1,351 | -$34 | -2.5% | | Gross profit | $369 | $380 | -$11 | -2.9% | | Operating income | $151 | $142 | +$9 | +6.3% | | Net earnings | $72 | $43 | +$29 | +67.4% | - Net sales decrease was primarily due to **unfavorable volume and mix** from lower OEM sales across all regions and the end of contract manufacturing agreements[129](index=129&type=chunk) - Other operating (income) expense, net, shifted from a **$22 million expense to a $1 million income**, mainly due to a decrease in transaction-related costs, particularly adjustments under the Tax Matters Agreement[133](index=133&type=chunk)[134](index=134&type=chunk) - Interest expense **decreased from $61 million to $40 million**, primarily due to the loss on extinguishment from debt restructuring in the prior period[137](index=137&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity at $846 million, though operating cash flow decreased due to higher working capital demands and financing cash use increased from stock repurchases Liquidity Position | Metric | June 30, 2025 ($ in millions) | | :-------------------------------- | :---------------------------- | | Cash and cash equivalents | $347 | | Availability on Revolving Facility | $499 | | **Total Liquidity** | **$846** | - Net cash provided by operating activities **decreased to $97 million** for the six months ended June 30, 2025, from $140 million in the prior year, primarily due to increased working capital demands[152](index=152&type=chunk) - Net cash used in investing activities **increased to $68 million** (vs $59 million), primarily for capital expenditures, which were 4.1% of sales (vs 3.5%)[153](index=153&type=chunk) - Net cash used in financing activities **increased to $169 million** (vs $126 million), primarily due to stock repurchases[154](index=154&type=chunk) [Critical Accounting Policies and Estimates](index=43&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No material changes were made to the company's critical accounting policies and estimates during the quarter ended June 30, 2025 - **No material changes** to critical accounting policies and estimates occurred during the quarter ended June 30, 2025[155](index=155&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company details its exposure to market risks, primarily currency exchange rate fluctuations, and its mitigation strategies [Currency Exchange Rate Risk](index=43&type=section&id=Currency%20Exchange%20Rate%20Risk) - The Company is exposed to currency exchange rate risk from global operations and transactions in multiple non-functional currencies (e.g., USD, Euro, CNY, GBP, MXN)[157](index=157&type=chunk) - Risk mitigation strategies include establishing **local production facilities** and using derivative financial instruments[157](index=157&type=chunk)[158](index=158&type=chunk) - A pre-tax loss of **$8 million** was deferred for a designated net investment hedge within the cumulative translation account in AOCI at June 30, 2025[159](index=159&type=chunk) Currency Sensitivity Analysis | Currency | % Change in USD | Approximate Impact ($ in millions) | | :--------------- | :-------------- | :--------------------------------- | | Euro | 14% | $84 | | Brazilian Real | 14% | $19 | | British Pound | 10% | $26 | | Chinese Renminbi | 2% | $9 | [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective as of June 30, 2025, with no material changes in internal controls - Disclosure controls and procedures were evaluated as **effective** as of June 30, 2025[162](index=162&type=chunk) - **No material changes** in internal control over financial reporting occurred during the period[163](index=163&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, with environmental matter disclosures required above a $1 million threshold - The Company is involved in various commercial and legal claims in the **ordinary course of business**[165](index=165&type=chunk) - Disclosure of environmental matters is required if potential monetary sanctions **exceed $1 million**[166](index=166&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's previously disclosed risk factors occurred during the three months ended June 30, 2025 - **No material changes** to previously disclosed risk factors occurred during the three months ended June 30, 2025[167](index=167&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The share repurchase program was increased to $600 million, with significant repurchases made during the second quarter of 2025 - The share repurchase program capacity was increased to **$600 million**[168](index=168&type=chunk) - As of June 30, 2025, the Company had repurchased **$376 million** of common stock under its repurchase program[168](index=168&type=chunk) Share Repurchase Activity | Period | Total shares purchased | Average price per share ($) | Remaining value ($ in millions) | | :------------------------ | :--------------------- | :-------------------------- | :------------------------------ | | May 1, 2025 - May 31, 2025 | 445,611 | $43.50 | $245 | | June 1, 2025 - June 30, 2025 | 480,139 | $42.94 | $224 | [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) The Board approved amended by-laws, and no directors or officers entered new Rule 10b5-1 trading arrangements during the period - The Board approved the **Second Amended and Restated By-Laws** on July 21, 2025, including revisions for DGCL conformity, clarified shareholder nomination/proposal procedures, and administrative changes[171](index=171&type=chunk)[173](index=173&type=chunk) - **No directors or officers** adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the six months ended June 30, 2025[172](index=172&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including by-laws, certifications, and XBRL documents - Key exhibits include the Second Amended and Restated By-Laws, Amended and Restated PHINIA Inc. Transition Income Plan, CEO and CFO certifications, and Inline XBRL documents[176](index=176&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) The report is duly signed by the Vice President and Controller of PHINIA Inc. on July 24, 2025 - The report was signed by **Samantha M. Pombier**, Vice President and Controller, on July 24, 2025[179](index=179&type=chunk)

Core Viewpoint - Phinia reported strong quarterly earnings, exceeding expectations and showing significant year-over-year growth in both earnings and revenues [1][2]. Financial Performance - Phinia's earnings for the quarter were $1.27 per share, surpassing the Zacks Consensus Estimate of $0.99 per share, and up from $0.88 per share a year ago, representing an earnings surprise of +28.28% [1]. - The company posted revenues of $890 million for the quarter, exceeding the Zacks Consensus Estimate by 5.47%, and up from $868 million in the same quarter last year [2]. Market Performance - Phinia shares have increased by approximately 1.6% since the beginning of the year, while the S&P 500 has gained 8.1% [3]. - The stock is currently rated Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.05 on revenues of $832.45 million, and for the current fiscal year, it is $4.17 on revenues of $3.31 billion [7]. - The Automotive - Original Equipment industry, to which Phinia belongs, is ranked in the top 39% of Zacks industries, suggesting a favorable outlook for the sector [8].

Financial Data and Key Metrics Changes - Net sales for Q2 2025 were $890 million, an increase of 2.5% year over year, with adjusted earnings per diluted share rising to $1.27 from $0.88 in the same period last year [7][10][21] - Adjusted EBITDA was $126 million with a margin of 14.2%, reflecting a 60 basis point year-over-year expansion [9][27] - Total segment adjusted operating margin increased to 13.4%, a 120 basis point rise compared to Q2 2024 [10][22] Business Line Data and Key Metrics Changes - Aftermarket segment sales increased slightly year over year, driven by favorable foreign exchange and tariff recoveries, while Fuel Systems segment sales rose by 3.7% [22][23] - Aftermarket segment margin improved to 16.1%, up 100 basis points, while Fuel Systems segment margins reached 11.5%, up 140 basis points year over year [25][26] Market Data and Key Metrics Changes - The average age of U.S. light vehicles increased to approximately 12.8 years, indicating a growing market for nondiscretionary aftermarket parts [14] - Sales strength was noted in the independent aftermarket in Europe and light vehicle sales in China, while commercial and heavy-duty vehicle sales remained flat to down across all regions [26] Company Strategy and Development Direction - The company is focused on expanding its CV industrial and aerospace OE business, which currently accounts for 73% of revenues, while maintaining light vehicle OE sales at approximately $900 million [17] - The recent acquisition of SEM is expected to enhance the company's capabilities in alternative fuel technology and open adjacent market opportunities [18][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite ongoing economic uncertainties, maintaining a full-year outlook [19][32] - The company is optimistic about the second half of the year, expecting to integrate the SEM business and continue executing strategic priorities [33] Other Important Information - The company returned approximately $50 million to shareholders through share repurchases and dividends during the quarter [6][18] - The balance sheet remains strong with cash and cash equivalents of $347 million and total liquidity of approximately $850 million [19][28] Q&A Session Summary Question: Dynamics driving the strong bounce back in Q2 - Management noted that the recovery was influenced by improved visibility and order board strength, along with favorable FX and tariff recoveries [35][36] Question: Conversations at the Paris Air Show - Management reported positive discussions with customers, including Safran, and confirmed progress in the aerospace certification process [38][39] Question: Strategic rationale behind the SEM acquisition - The acquisition is seen as an opportunity to provide greater system solutions for customers and leverage existing manufacturing capabilities to accelerate SEM's growth [40][42] Question: Impact of Ford recall on financials - Management indicated that the recall is primarily a Ford issue and does not expect a significant impact on their financials [47][48] Question: Capital allocation intentions for the rest of the year - Management confirmed plans to continue share repurchases while maintaining a strong balance sheet and cash flow [49][50] Question: Clarification on tariff recoveries and net tariff impact - Management clarified that the company recovered $9 million in tariffs but faced a net tariff cost of $2 million, indicating ongoing efforts to close the gap [54][55]

Q2 2025 EARNINGS July 24, 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," "ex ...