PHINIA (US:PHIN)2025-10-28 15:01Financial 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]