PHINIA (PHIN) Gabelli Funds 48th Annual Automotive Aftermarket Symposium summary

Financial overview and capital allocation

• Equity cap stands at $2.1 billion with a strong balance sheet and $500 million net debt, totaling $2.6 billion enterprise value.

• Ongoing share buybacks have reduced shares outstanding to 42 million, with $212 million repurchased since the spin-off.

• Net leverage target increased to 1.5x after refinancing, lowering interest and debt service costs.

• Over 11% of shares repurchased in 15 months, with cash balances up and low leverage maintained.

• Focus on shareholder returns through disciplined capital allocation and continued buybacks.

Business strategy and market positioning

• Spun off from BorgWarner, enabling renewed investment and focus on aftermarket and commercial vehicle growth.

• Broad portfolio across commercial, light vehicle, alternative fuels, and aerospace, with strong system integration capabilities.

• Aftermarket represents nearly a third of revenue, providing resilience during OE market downturns.

• Targeting aftermarket growth to over 40% of sales, expanding into off-highway, industrial, and aerospace sectors.

• Product leadership defined by customer-valued technology, not just innovation for its own sake.

Growth, margins, and operational discipline

• Addressable markets expected to grow 1–2% annually, with organic growth targeted at 2–4% CAGR through the decade.

• Financial discipline enforced via Economic Value Added metrics and cash flow focus in bonus plans.

• EBITDA margins maintained at 14–15%, with CapEx around 4% and R&D at 3%.

• Recent Q3 sales down 3.7% adjusted, but aftermarket up 4–5%, supporting stable cash flow.

• Margin defense achieved by culling unprofitable product lines and focusing on high-return investments.