PHINIA Inc. Q4 2025 Earnings Call Summary

PHINIA Inc. Q4 2025 Earnings Call Summary Moby Intelligence Fri, February 13, 2026 at 5:32 AM GMT+8 3 min read In this article:

PHIN +1.62%

PHINIA Inc. Q4 2025 Earnings Call Summary - Moby

Strategic Performance and Operational Resilience

• Delivered 2025 results in line with expectations by leveraging a diversified mix of regions, customers, and end markets to mitigate macro volatility.

• Achieved year-over-year growth in both Fuel Systems and Aftermarket segments for three consecutive quarters, driven by strong performance in Asia and the Americas.

• Strategic shift of Original Equipment Service (OES) sales from Aftermarket to Fuel Systems was implemented to streamline distribution and reduce administrative burdens.

• Expanded the industrial and off-highway footprint to 6% of total sales, reflecting a deliberate pivot toward higher-growth, non-automotive adjacencies.

• Aftermarket resilience was supported by an aging global vehicle fleet and the addition of approximately 5,800 new SKUs to enhance portfolio coverage.

• Maintained a disciplined capital allocation strategy, returning over $500 million to shareholders since the spin-off while keeping net leverage at a conservative 1.3x.

2026 Outlook and Strategic Assumptions

• Anticipates 2026 global industry volumes to be flat to slightly down, including battery electric vehicle (BEV) penetration.

• Expects to outpace the market by 400-500 basis points through continued share gains in Gasoline Direct Injection (GDI) and expansion in alternative fuel applications.

• Guidance assumes mid-single-digit revenue growth inclusive of FX, with adjusted EBITDA margins projected between 13.7% and 14.3%.

• Financial outlook excludes potential impacts from future government policy changes, such as new tariffs or tax adjustments.

• Strategic focus remains on product leadership in 500 bar systems and alternative fuels like natural gas and E100s to secure long-term sustainable growth.

Structural Changes and Risk Factors

• Recast financial reporting to provide granular visibility into the 'off-highway, industrial, and other' end market, now a standalone reporting category.

• Adjusted effective tax rate improved significantly to 32.5% in 2025, though management cautions that future improvements will not be linear.

• Tariff recoveries provided a $38 million revenue tailwind in 2025 but acted as a margin dilutant due to the pass-through nature of the costs.

• Successfully completed the first full year of operations without reliance on former parent contract manufacturing or transition service agreements.

Q&A Session Highlights

Drivers of 2026 margin expansion and incremental conversion rates

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• Management targets a 20% incremental EBITDA conversion rate, which they consider strong given the dilutive effects of FX and zero-margin tariff pass-throughs.

• Excluding the 'hollow' revenue from tariffs and currency fluctuations, underlying operational margin expansion is expected to be higher than the headline figures.

Aerospace and defense contract momentum and timeline

• Confirmed the third A&D contract is with an existing customer, signaling deepening relationships in the sector.

• The first project began production in Q4 2025, while the newly announced third contract is slated for a July 2027 start.

Competitive dynamics in the GDI and ICE markets

• Management observes that while larger competitors are diversifying away from ICE, PHINIA's dedicated focus allows it to capture share from winding-down smaller players.

• The company's 'first to market' 500 bar system and focus on hybrid-compatible GDI applications are cited as primary competitive advantages.

Capital allocation priorities between M&A and buybacks

• The board increased the share repurchase authorization by $150 million to maintain flexibility as the share price appreciates.

• M&A remains opportunistic; management will not 'force' deals and evaluates acquisitions against the value of repurchasing their own shares.

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