PHINIA (PHIN) investor relations material

Strategic overview and market positioning

• Focus on product leadership and technology to deliver high-value, non-commodity products across diversified markets, including fuel injection, starters, alternators, and aftermarket segments.

• Diversified customer base with top five customers accounting for 37% of revenue; largest end market is service (35%), followed by light passenger vehicles (25%), light commercial vehicles (19%), and medium/heavy-duty vehicles (15%).

• Leverages existing engineering and manufacturing capabilities to serve multiple end markets, enabling resource flexibility and resilience without significant new investment.

• Recent acquisition of stoba adds aerospace and defense certified capacity in Germany, enhances supply chain resilience, and opens new customer opportunities.

• Maintains a disciplined approach to capital allocation, targeting a minimum 15% return on invested capital for new programs and focusing on maximizing shareholder returns.

Financial performance and capital allocation

• Reported $130 million EBITDA and $940 million in sales for the recent quarter, with year-over-year adjusted EBITDA growth of around 20%.

• Conservative leverage at 1.3x, with a target range of 1.5x; flexibility to increase to 2x as growth and interest rates evolve.

• Since the spin-off, returned $665 million to shareholders, repurchased 24% of shares, and increased dividends twice.

• Organic growth rate targeted at 2%-4% per year, with EBITDA margins expected to remain in the 14%-15% range.

• Capital allocation prioritizes organic growth (R&D at 3% net, CapEx at 3%-4%), followed by dividends and disciplined acquisitions or share buybacks based on value.

Aftermarket and industrial segment growth

• Aftermarket and service business expected to grow from 35% to 40% of sales organically by decade's end, driven by increasing vehicle age, vehicles in operation, and product portfolio expansion.

• Aftermarket segment delivers about half of total profits, with margins at 17% and strong cash flow.

• Premium brands like Delphi and Delco Remy drive pricing power and customer loyalty, supporting higher margins and profitability.

• SKU expansion and disciplined regional launches contribute to outperformance in aftermarket growth.

• Industrial aftermarket, especially in heavy truck, is more profitable and benefits from higher replacement rates.