PHINIA Announces Fourth Quarter and Full Year 2024 Financial Results
PHINIA, a global leader in premium fuel systems, electrical systems, and aftermarket solutions, has reported Announces its financial results for the fourth quarter and the full year ending December 31, 2024. Despite facing industry-wide challenges, the company demonstrated resilience through strategic cost management, robust aftermarket performance, and key business expansions.
Fourth Quarter 2024 Financial Highlights
- Net Sales: PHINIA reported net sales of $833 million, marking a 5.6% decline compared to the fourth quarter of 2023. The primary driver of this decline was lower Fuel Systems (FS) sales across all regions, though this was partially offset by strong Aftermarket sales, which experienced consistent growth globally.
- Operating Income: The company recorded $51 million in operating income, reflecting a $30 million decrease from the previous year. This resulted in an operating margin of 6.1%, a year-over-year drop of 310 basis points (bps).
- Adjusted Operating Income: Adjusted operating income was $78 million, a $11 million decline from Q4 2023, with an adjusted operating income margin of 9.4%, down 100 bps from the prior year. Factors contributing to this decline included increased employment costs and additional expenses associated with operating as a standalone company.
- Net Earnings and Margins: Net earnings came in at $5 million, equating to a net margin of 0.6%, a significant decrease of $28 million and 310 bps year-over-year.
- Earnings Per Share (EPS): PHINIA posted a diluted EPS of $0.12, while adjusted EPS, excluding non-comparable items, stood at $0.71.
- Adjusted EBITDA: The company reported adjusted EBITDA of $110 million, reflecting a $17 million decrease and a 160 bps decline in EBITDA margin to 13.2%.
- Cash Flow & Shareholder Returns: Net cash from operating activities was $73 million, an $11 million increase year-over-year. Adjusted free cash flow increased 31%, reaching $72 million, driven by improved working capital management and optimized capital expenditures. Share repurchases totaled $24 million, and $11 million was distributed as dividends to shareholders.
Full Year 2024 Financial Performance
- Annual Revenue: Net sales for 2024 totaled $3.40 billion, representing a 2.8% decline compared to 2023. Lower commercial vehicle (CV) sales in Europe and reduced sales in China within the FS segment were the main contributors to the revenue drop. However, strong Aftermarket sales in Europe and favorable customer pricing helped mitigate the overall decline.
- Operating Income and Margins: Operating income for the full year was $259 million, reflecting a $18 million increase from the previous year. Operating margin improved 70 bps to 7.6%.
- Adjusted Operating Income: Adjusted operating income was $346 million, with an adjusted operating income margin of 10.2%, remaining relatively stable year-over-year despite the challenges of operating as an independent entity.
- Net Earnings: Net earnings for the year stood at $79 million, a $23 million decline from 2023, resulting in a net margin of 2.3%.
- Earnings Per Share: The diluted EPS was $1.76, while adjusted EPS stood at $3.86, excluding $2.10 per share related to non-comparable items.
- Adjusted EBITDA: The company reported an adjusted EBITDA of $478 million, a $12 million decline year-over-year, with a margin of 14.1%.
- Cash Flow: Net cash generated from operating activities reached $308 million, a $58 million increase year-over-year. Adjusted free cash flow saw an impressive 57% growth, reaching $253 million, attributed to better working capital efficiency and capital expenditure optimization.
- Capital Expenditures & Debt Position: Capital expenditures for the year were $105 million, primarily for new machinery and equipment to support new program launches. PHINIA ended 2024 with $484 million in cash and cash equivalents and $499 million available under its revolving credit facility. Long-term debt stood at $963 million at year-end.
Key Strategic Wins and Business Expansions
PHINIA secured several notable business wins across its core markets in Q4:
- Aerospace and Defense: The company won its second contract in this sector, providing a Post Combustion Injector system, a critical component for flight profile engine performance.
- Commercial Vehicles (CV): PHINIA extended a key contract with a medium-duty engine manufacturer, reinforcing its presence in the CV market.
- Light Vehicles (LV): A Gas Direct Injection (GDi) program was extended for the South American market, highlighting the company’s continued growth in light vehicle applications.
- Aftermarket Expansion: PHINIA increased its market share with a major European client, secured a multi-year contract with a CV OEM in South America, and expanded its distribution network in Southeast Asia.
CEO Statement
Brady Ericson, President and CEO of PHINIA, expressed his appreciation for the company’s resilience and commitment:
“We delivered solid results in the fourth quarter despite softened demand in the Light Vehicle and Commercial Vehicle markets. This was driven by our strong operational execution, improved pricing strategies, and outstanding Aftermarket sales. As we close our first full year as an independent company, I extend my deepest gratitude to our employees, customers, partners, and stakeholders for their unwavering support. We are committed to building a stronger, more innovative future together.”
2025 Financial Guidance
PHINIA has set the following expectations for full-year 2025:
- Net Sales: Projected between $3.23 billion and $3.43 billion, representing a 2% decline to 4% growth after adjusting for foreign exchange and contract manufacturing agreements.
- Net Earnings: Expected to range from $140 million to $170 million, with a net earnings margin of 4.3% to 5.0%.
- Adjusted EBITDA: Forecasted between $450 million and $490 million, with an EBITDA margin of 13.7% to 14.5%.
- Free Cash Flow: Expected between $160 million and $200 million.
- Tax Rate: Anticipated adjusted tax rate of 38% to 42%.
The company will host a conference call at 8:30 a.m. ET to discuss its Q4 and full-year results, introduce its 2025 outlook, and address questions from investors. The webcast will be available on the PHINIA investor relations website.
Dividend Increase and Share Repurchase Program
PHINIA’s Board of Directors approved an 8% dividend increase, raising the quarterly dividend to $0.27 per share, payable on March 14, 2025, to shareholders of record as of February 28, 2025.
Additionally, the company expanded its share repurchase program, authorizing a $200 million increase to its existing $400 million program, bringing the total available for repurchase to $320 million. Shares may be repurchased through open-market transactions, privately negotiated deals, or other SEC-compliant methods. The repurchase program remains open-ended and subject to market conditions.
