PHINIA Inc. Reports Q3 2024 Financial Results, Net Sales Down 6% to $839M

PHINIA Inc., a company specializing in the development and manufacture of integrated components for combustion and hybrid propulsion systems, reported its financial results for the third quarter and the nine months ended September 30, 2024. The company, which was spun off from BorgWarner Inc. on July 3, 2023, is now trading on the NYSE under the symbol "PHIN."

For the three months ended September 30, 2024, PHINIA recorded net sales of $839 million, a decrease of $57 million (6%) compared to $896 million in the same period of 2023. The decline was primarily attributed to unfavorable volume, particularly in the Fuel Systems segment, which saw a reduction in commercial vehicle sales in Europe and China. This was partially offset by growth in the Aftermarket segment, which reported a 6% increase in sales. Gross profit for the quarter increased to $187 million, representing a gross margin of 22.3%, up from 19.8% in the prior year.

Operating income for the third quarter rose to $66 million, compared to $46 million in the same period last year. Net earnings improved significantly to $31 million, reversing a net loss of $1 million in Q3 2023. The effective tax rate for the quarter was 42%, a notable decrease from 103% in the previous year, attributed to a change in the jurisdictional mix of pre-tax earnings.

For the nine months ended September 30, 2024, net sales totaled $2,570 million, down from $2,618 million in the same period of 2023. Gross profit for this period was $567 million, an increase from $538 million year-over-year. Operating income also improved to $208 million, compared to $160 million in the prior year. Net earnings for the nine-month period were $74 million, up from $69 million in 2023.

PHINIA's cash and cash equivalents increased to $477 million as of September 30, 2024, compared to $365 million at the end of 2023. The company reported net cash provided by operating activities of $235 million for the nine months, an increase from $188 million in the same period of 2023.

Strategically, PHINIA has been active in managing its debt, having entered into a $1.225 billion Credit Agreement in July 2023. The company fully repaid its Term Loan B Facility in April 2024 and its Term Loan A Facility in September 2024, utilizing proceeds from the issuance of senior notes. Additionally, PHINIA has initiated a share repurchase program, with $212 million of common stock repurchased as of September 30, 2024, under an increased authorization totaling $400 million.

Overall, while PHINIA faced challenges in sales volume, particularly in its Fuel Systems segment, it demonstrated improved profitability and cash flow management in the latest reporting period.