PHINIA Inc. Q4 2025 Earnings Call Summary

• Delivered 2025 results in line with expectations by leveraging a diversified mix of regions, customers, and end markets to mitigate macro volatility.

• Achieved year-over-year growth in both Fuel Systems and Aftermarket segments for three consecutive quarters, driven by strong performance in Asia and the Americas.

• Strategic shift of Original Equipment Service (OES) sales from Aftermarket to Fuel Systems was implemented to streamline distribution and reduce administrative burdens.

• Expanded the industrial and off-highway footprint to 6% of total sales, reflecting a deliberate pivot toward higher-growth, non-automotive adjacencies.

• Aftermarket resilience was supported by an aging global vehicle fleet and the addition of approximately 5,800 new SKUs to enhance portfolio coverage.

• Maintained a disciplined capital allocation strategy, returning over $500 million to shareholders since the spin-off while keeping net leverage at a conservative 1.3x.

• Anticipates 2026 global industry volumes to be flat to slightly down, including battery electric vehicle (BEV) penetration.

• Expects to outpace the market by 400-500 basis points through continued share gains in Gasoline Direct Injection (GDI) and expansion in alternative fuel applications.

• Guidance assumes mid-single-digit revenue growth inclusive of FX, with adjusted EBITDA margins projected between 13.7% and 14.3%.

• Financial outlook excludes potential impacts from future government policy changes, such as new tariffs or tax adjustments.

• Strategic focus remains on product leadership in 500 bar systems and alternative fuels like natural gas and E100s to secure long-term sustainable growth.

• Recast financial reporting to provide granular visibility into the ‘off-highway, industrial, and other’ end market, now a standalone reporting category.

• Adjusted effective tax rate improved significantly to 32.5% in 2025, though management cautions that future improvements will not be linear.

• Tariff recoveries provided a $38 million revenue tailwind in 2025 but acted as a margin dilutant due to the pass-through nature of the costs.

• Successfully completed the first full year of operations without reliance on former parent contract manufacturing or transition service agreements.

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