PHINIA (PHIN) investor relations material

Strategic vision and market positioning

• Focus on product leadership, stable growth, and financial discipline to maximize long-term shareholder value, with a diversified industrial approach and disciplined capital allocation strategies.

• Diversified end markets, with expansion into aerospace, defense, and industrial segments leveraging core competencies and manufacturing assets.

• Commitment to combustion technology, alternative fuels, and hybrid integration as key growth drivers, with ongoing investment in R&D (6% of sales) and a strong intellectual property portfolio.

• Targeting increased market share through innovation, customer intimacy, and expansion into new geographies and adjacent markets, with a shift toward commercial, industrial, and aftermarket segments.

• Service, commercial vehicle, and off-highway/industrial segments expected to comprise over 80% of future revenues as light passenger vehicle share declines.

Financial guidance and capital allocation

• 2025 sales of $3.5 billion, with adjusted EBITDA of $478 million (13.7% margin) and adjusted EPS of $4.96, up 28.5% from 2024; 2026 guidance: sales of $3.5–$3.7 billion, adjusted EBITDA of $485–$525 million, free cash flow of $200–$240 million, and tax rate of 30–34%.

• Long-term organic sales CAGR targeted at 2–4%, aiming for $4.2 billion sales by 2030 (excluding M&A), with $1.9 billion cash available for allocation from 2026–2030 and a clear path to $5B in sales.

• Strong balance sheet with net leverage at 1.3x and liquidity of $859M as of 2025; target net leverage may increase to 2x EBITDA as scale and stability improve.

• Capital allocation prioritizes core business investment, dividends, and opportunistic share repurchases or M&A, with over $109M in dividends and $436M in share repurchases since inception.

• Projected financials at $5B sales include 15%+ adjusted EBITDA margin, ~$350M adjusted free cash flow, and 2.0x net leverage.

Business developments and growth drivers

• Aftermarket and service segments are growing faster than the market, driven by share gains, new product introductions, and geographic expansion, with robust product launches and investments in remanufacturing.

• Expansion into off-highway, industrial, and aerospace markets is leveraging existing technology and manufacturing processes, with significant revenue growth expected and support from the SEM acquisition.

• R&D is focused 89% on efficiency improvements, including alternative fuels, with flexibility to shift between traditional and new technologies as markets evolve; R&D and capital expenditures managed at 3% and 4% of net sales, respectively.

• Recent acquisition of SEM strengthens ignition systems and industrial market access; further M&A will be selective and disciplined, supporting growth in alternative fuels, aerospace, and industrial sectors.

• Strong operational execution, supply chain productivity, and IT consolidation have driven margin expansion and cash flow conversion above peers, with continued focus on operational excellence and cost optimization.