PHINIA Q3 Earnings Call Highlights

Key Points

• PHINIA delivered record adjusted EBITDA and EPS in Q3 2026: Sales rose 0.4% to $912 million, while adjusted EBITDA reached $135 million with a 14.8% margin and adjusted EPS increased 15.1% to $1.83.
• The company raised its 2026 outlook to revenue of $3.625 billion–$3.675 billion and adjusted EBITDA of $500 million–$520 million, citing stronger commercial-vehicle demand, new program launches and aftermarket momentum.
• PHINIA completed its stoba Group acquisition on Oct. 1, expanding its industrial, aerospace and defense exposure, while maintaining financial flexibility with 1.3x net leverage, $813 million in total liquidity and continued share repurchases.

PHINIA NYSE: PHIN reported third-quarter 2026 results that management said were in line with expectations, supported by commercial-vehicle demand in Europe and North America, steady aftermarket activity and new program launches. The company raised the low end of its full-year sales outlook and increased its adjusted EBITDA margin outlook, while completing its acquisition of stoba Group on Oct. 1.

Chief Executive Officer Brady Ericson said the company delivered “solid operational and financial performance” despite an uncertain macroeconomic environment marked by shipping challenges, commodity inflation and pricing pressure in certain markets. He said PHINIA’s diversified product, customer and geographic footprint helped it manage those pressures.

Third-quarter net sales were $912 million, up $4 million, or 0.4%, from a year earlier. The company said positive volume and mix contributed $21 million of growth, but this was offset by pricing. Sales were also negatively affected by $21 million due to the timing of tariff recovery mechanisms with customers.

Adjusted EBITDA reached a quarterly record of $135 million, up $2 million year over year, with a 14.8% margin. Adjusted diluted earnings per share, excluding non-operating items, rose 15.1% to a record $1.83 from $1.59 a year earlier. Management attributed the increase to operating performance, a lower tax rate and share repurchases.

Segment performance and market conditions

PHINIA’s Power Systems segment, formerly known as Fuel Systems, posted a 12.1% margin on slightly lower sales. Aftermarket Solutions, previously called Aftermarket, generated a 17.1% margin as sales rose more than 4% from the prior-year period.

Chief Financial Officer Chris Gropp said commercial-vehicle growth in Europe and the Americas helped offset weakness in Chinese light-vehicle and commercial-vehicle sales. The company continued to face elevated commodity and freight costs, although most of those costs were covered by customer recovery arrangements. Gropp said the remaining unrecovered costs were in the low- to mid-single-digit millions and should become a modest tailwind in the fourth quarter and into 2027 as recoveries occur.

Research and development spending as a percentage of sales was lower than in the first two quarters of 2026. Ericson said net R&D expense ran in the mid-3% range during the first half and is expected to be in the mid-2% range in the second half, leaving the company near its stated annual target of roughly 3% of sales.

PHINIA reported an adjusted effective tax rate of 23% in the quarter, benefiting from tax-structuring work. The company now expects its full-year adjusted tax rate to be between 28% and 30%.

Guidance raised as launches and commercial vehicles support outlook

The company refined its 2026 outlook, raising the bottom end of its revenue range by $60 million and the top end by $10 million. PHINIA now expects full-year revenue of $3.625 billion to $3.675 billion, with a midpoint of $3.65 billion. The forecast includes foreign-exchange effects and one quarter of stoba results; excluding expected FX, management expects low-single-digit growth.

• Adjusted EBITDA is projected at $500 million to $520 million.
• Adjusted EBITDA margin is expected to be 13.7% to 14.1%, raising the midpoint by 10 basis points.
• Adjusted free cash flow is forecast at $220 million to $250 million.
• Adjusted effective tax rate is expected to be 28% to 30%.

Ericson said less than half of the guidance increase reflected stoba, with the majority driven by organic performance. He cited a stronger commercial-vehicle order board in North America and Europe, better-than-expected ramps in newly launched programs, and continued aftermarket momentum. He also said fourth-quarter revenue at the midpoint of guidance would exceed third-quarter revenue, an unusual seasonal pattern for the business.

Looking toward 2027, Ericson said the company expects commercial-vehicle markets in North America and Europe to remain strong, while programs launched in the fourth quarter should provide support next year. He also said tariff effects are expected to become largely a non-event in the fourth quarter and in 2027, absent additional policy changes.

New business awards and stoba acquisition

PHINIA highlighted new awards in both business segments. In Power Systems, wins included its first methanol engine program for industrial off-highway applications in China, a compressed natural gas injector program for India’s light-vehicle market, and an extension of a gasoline direct injection pump award for a North American range-extender application.

Aftermarket Solutions added a North American fuel-injector remanufacturing customer, won braking business in Spain, expanded Southeast Asian distribution for steering and suspension products, and secured additional diesel, electronics and engine-management business in Saudi Arabia, Portugal and Spain.

The company also cited several launches, including a heated-tip injector for a Brazilian flex-fuel SUV, a fuel-delivery module for North American medium-duty truck and bus applications, a 500-bar gasoline direct injection pump and fuel rail assembly for hybrid applications in China, and a multi-product system for a North American diesel pickup platform.

PHINIA closed its stoba Group acquisition using available liquidity. Ericson said the transaction expands the company’s exposure to off-highway industrial markets, adds customers and capabilities, and provides two additional aerospace-and-defense-qualified locations. The company said it is pursuing aerospace opportunities with eight customers across 13 potential programs, with sourcing decisions expected later in 2026 and into 2027.

Capital returns and liquidity

PHINIA returned $76 million to shareholders in the quarter through $65 million of share repurchases and $11 million of dividends. Year-to-date repurchases totaled $163 million, while dividends totaled $33 million. The company had $151 million remaining under its current repurchase authorization.

Since its July 2023 spin-off through the third quarter, PHINIA said it has repurchased $599 million of shares, representing about 26% of its original share count, and paid $142 million in dividends. Net leverage stood at 1.3 times, below the company’s 1.5-times long-term target. Cash and cash equivalents were $436 million at quarter-end, and total liquidity, including credit-facility capacity, was $813 million.

About PHINIA (NYSE:PHIN)

PHINIA Inc NYSE: PHIN is a global supplier of fuel systems, electrical systems and aftermarket products for automotive, commercial vehicle and industrial applications. The company develops technologies that support the performance, efficiency and emissions management of internal-combustion engines and other propulsion systems.

Its products include fuel injectors, fuel pumps and modules, fuel-system controls, ignition components, sensors, actuators and electronic control systems. PHINIA also supplies diesel fuel systems and related technologies for commercial vehicles and off-highway equipment, as well as replacement parts, service products and solutions through its aftermarket business.

PHINIA was established as an independent public company in 2023 after being spun off from BorgWarner.

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