PHINIA, a leader in premium fuel and electrical systems along with aftermarket solutions, has released its financial results for Q3 2024, ending September 30, 2024.
Third Quarter Financial Highlights
- Net Sales: Reached $839 million, a 6.4% decline from Q3 2023. Lower Fuel Systems (FS) sales in Europe and China were partially offset by robust Aftermarket sales in Europe. Adjusted sales were $838 million, down 3.7% year-over-year, excluding the effects of concluded contract manufacturing.
- Operating Income: Recorded at $66 million, with an operating margin of 7.9%, marking a $20 million increase and a 280-basis point (bps) improvement from last year. This growth was driven by reduced separation, transaction expenses, and supplier costs.
- Adjusted Operating Income: Stood at $87 million, with an adjusted margin of 10.4%, reflecting a $5 million increase and a 100 bps rise year-over-year.
- Net Earnings: $31 million, with a 3.7% net margin, representing a $32 million improvement and a 380 bps rise from last year.
- Earnings Per Share: Reported at $0.70 per diluted share, with adjusted earnings per share at $1.17.
- Adjusted EBITDA: $120 million, achieving a margin of 14.3%—a $3 million and 90 bps year-over-year increase, bolstered by Aftermarket price increases and cost control measures across segments.
- Cash Flow: Generated $95 million from operations, a $60 million decrease year-over-year. Adjusted free cash flow totaled $60 million.
- Share Repurchase Program: Bought back $75 million in shares, with $188 million remaining from an expanded $400 million repurchase authorization. Additionally, the Board raised the repurchase limit by $250 million this quarter.
- Debt Issuance: Issued $450 million in 6.625% senior unsecured notes due 2032, using proceeds to pay down all outstanding Term Loan A borrowings.
Strategic Growth and Market Wins
PHINIA secured significant new business across its strategic markets, including:
- An off-highway diesel market win with an electronically controlled low-pressure injection system for compact diesel engines in equipment such as excavators and forklifts, enhancing fuel efficiency and lowering emissions.
- A new partnership with a European automaker in India’s expanding combustion market, supplying a 1.0L GDi pump.
- A conquest win in the U.S. for a high-volume GDi application, used in light trucks and luxury SUVs.
- Renewed and new Aftermarket agreements with major customers in Europe, North America, and Mexico.
Brady Ericson, PHINIA’s President and CEO, commented on the company’s financial strength and ability to meet growing demand in the Aftermarket segment, which allowed a 90 bps expansion in adjusted EBITDA margins and the generation of $60 million in adjusted free cash flow. “Our ongoing success in booking accretive new business in Fuel Systems and Aftermarket segments underscores the strength of our strategic approach,” Ericson noted.
Balance Sheet and Cash Flow Overview
PHINIA ended Q3 with $477 million in cash and cash equivalents and $499 million in revolving credit capacity. Long-term debt totaled $987 million. Capital expenditures reached $25 million, primarily for new machinery and equipment investments, while $10 million in dividends were paid. Net cash from operating activities was $95 million, with $60 million in adjusted free cash flow.
2024 Full-Year Guidance Update
In light of softening vehicle markets, PHINIA adjusted its 2024 outlook:
- Net Sales: Revised to $3.36 billion – $3.41 billion, with adjusted sales at $3.34 billion – $3.39 billion.
- Net Earnings: Expected between $105 million – $125 million.
- Adjusted EBITDA: Projected at $470 million – $490 million, with margins ranging from 14.1% to 14.5%.
- Free Cash Flow: Estimated at $160 million – $200 million, with a tax rate range of 33% – 37%.
PHINIA remains focused on delivering financial resilience and expanding its portfolio in high-growth segments.
