Release Date: April 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Phinia Inc (PHIN, Financial) reported strong business retention and new conquest wins, indicating robust customer engagement and market expansion.
- The company maintained a healthy balance sheet with cash and cash equivalents of $373 million, contributing to a total liquidity of approximately $900 million.
- Phinia Inc (PHIN) returned $111 million to shareholders through share buybacks and dividends, demonstrating a commitment to shareholder value.
- The company achieved new business wins, including a 350-bar gasoline direct injection system for the Brazilian market and aftermarket business wins in Scandinavia and Canada.
- Phinia Inc (PHIN) continues to focus on long-term growth strategies, including investing in new product development and exploring M&A opportunities to drive additional scale.
Negative Points
- Net sales in the first quarter were $796 million, down 7.8% compared to the same period in the prior year, reflecting a challenging market environment.
- Adjusted EBITA margin decreased by 260 basis points year over year, primarily due to lower sales and added infrastructure costs.
- The company faced a 4.1% revenue decrease excluding FX impact and CMA agreements, indicating ongoing market softness.
- Phinia Inc (PHIN) experienced headwinds from foreign currency devaluation and lower OEM volumes, impacting sales performance.
- Tariff costs introduced in the US posed a financial challenge, with approximately $4 million in tariff costs expected to be passed through to customers in the second quarter.
Q & A Highlights
Q: Can you quantify your exposure to tariffs, both USMCA compliant and non-compliant?
A: Brady Ericson, CEO: The majority of our North American business is USMCA compliant, and over half of our revenues stay within the country, supplying to customers locally. We are confident in our ability to work with customers to manage tariff impacts.
Q: Have you seen any shifts in the production market, particularly in the commercial vehicle OE market?
A: Brady Ericson, CEO: The commercial vehicle market has softened, and we don't expect a pre-buy in the second half. However, our order board remains strong, and we are well-positioned due to our global business and customer diversity.
Q: How has foreign exchange impacted your financial outlook?
A: Brady Ericson, CEO: Initially, we anticipated an $80 million FX headwind, but it's now closer to $20 million. This is offset by expected tariff pass-throughs and some volume softness in commercial vehicles.
Q: How do you view the current uncertainty in the context of M&A?
A: Brady Ericson, CEO: We are in a strong financial position with ample liquidity. We are looking for smaller, cash-flowing acquisitions that won't significantly increase leverage, while also considering share repurchases.
Q: Can you elaborate on the impact of tariffs and your confidence in passing these costs to customers?
A: Brady Ericson, CEO: We have been in discussions with customers and have agreements in place to pass through tariff costs. Our systems allow for seamless tracking and auditing, and we are working collaboratively with customers to mitigate impacts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
