PHINIA (PHIN) CL King's 22nd Annual Best Ideas Conference 2024 summary

Opening remarks and company overview

• Recently spun off, now fully independent with a century-long industry presence and seasoned leadership.

• Operates in two main segments: fuel systems for various vehicle types and a global Aftermarket business.

• Global footprint with 44 locations in 20 countries and over 13,000 employees, supported by well-known brands.

Spinoff transition and corporate culture

• Achieved full operational independence from the former parent, completing over 150 transitional agreements.

• Transition was smooth for customers and employees, with minimal disruption.

• Shifted bonus structure to focus on economic value and cash flow, aligning incentives across all levels.

• Refinanced debt to improve covenants and interest rates, enabling more flexible capital allocation.

• Ongoing efforts to broaden investor and analyst understanding beyond Light Vehicle OE focus.

Market outlook and growth strategy

• Aftermarket business balances cyclical OE markets, providing stability.

• Light Vehicle OE business aims to maintain $1.5–$1.6B revenue by gaining market share despite EV growth.

• Transitioning capacity to Commercial Vehicle (CV), Industrial, and Off-Highway applications, including hydrogen and diesel.

• CV and Industrial markets expected to grow, less impacted by EV penetration than Light Vehicle.

• Plug-in hybrids and GDI engines offer higher content per vehicle and new business opportunities.