PHINIA Inc. Posted 13% Q4 EBITDA Margin, Expands Share Repurchase Program

PHINIA Inc. (NYSE: PHIN) reported its financial results for the fourth quarter and full year 2025, ending its second full year as a standalone business with operating numbers that met the high end of its previous organic growth targets. The automotive and industrial supplier has maintained a strong capital return strategy, repurchasing approximately 21% of its outstanding shares through 2023 from BorgWarner.

Quarterly and Annual Financial Overview

For the quarter ending December 31, 2025, PHINIA generated net sales of $889 million. The company’s adjusted EBITDA for the period reached $116 million, representing an adjusted EBITDA margin of 13.0%. Performance was reflected by strong demand in the Asian and American regions, although these gains were partially offset by lower sales volumes in Europe. Adjusted diluted earnings per share for the fourth quarter were $1.18.

Results for the full year 2025 showed a strong operating environment despite broader market volatility. PHINIA reported full-year adjusted sales of $3,414 million. Key performance metrics for the year include:

Adjusted EBITDA Margin: 14.1% for the whole year.

Liquidity: Total cash of $859 million at the end of the year, including $359 million in cash and cash equivalents.

Return to Shareholders: The company returned $40 million to shareholders in Q4 through $30 million in share repurchases and $10 million in dividends.

Component Performance and Strategic Restructuring

PHINIA’s Fuel Systems segment recorded Q4 net sales of $560 million, supported by a key “victory” win involving an afterburner fuel valve for global aerospace and defense contractors. The Aftermarket segment contributed $329 million to total sales for the quarter, benefiting from the addition of approximately 5,800 new SKUs by 2025.

Notably, the company made a significant reporting change in the fourth quarter, moving part of its Original Equipment Service (OES) business from the Aftermarket segment to Fuel Systems. Management indicated that this change is intended to simplify the sales structure by synchronizing the distribution and production facilities of those products.

2026 Outlook and Industrial Context

Looking ahead to 2026, PHINIA has issued a guidance that shows a cautious but stable outlook for the internal combustion engine (ICE) market. The company expects full-year sales between $3.515 billion and $3.715 billion. Adjusted EBITDA is expected to range from $485 million to $525 million, with margin expected to be between 13.7% and 14.3%.

The guidance is set against a broader environment where industry rates for ICE production for light vehicles are expected to decline in the mid-single digits, while ICE volumes for commercial vehicles may decline in the single digits. Despite these headwinds, PHINIA expects to maintain an annual average adjusted free cash flow of more than $200 million by the end of the decade.

Strategic Growth Drivers

The company’s growth strategy remains focused on the “earn the right to win” segments, particularly in alternative fuel technologies and the heavy commercial vehicle sector. In India, the company acquired a new business for port fuel injectors powered by compressed natural gas (CNG), highlighting its pivot to the low-carbon movement.

Management has emphasized a structured capital allocation approach, targeting a net leverage ratio of around 1.5x. For 2026, the Board has already approved a share repurchase program of up to $750 million.

Key Performance Indicators

PHINIA’s management noted that the company’s achievements in 2025, including its first acquisition of the SEM business in August, provide a foundation for continued and consistent performance. The company plans to prioritize modernizing its IT landscape and target other opportunities in the off-highway and aerospace sectors throughout 2026.

Reasons to Skip PHIN

• Exposure to ICE decreases: The 2026 outlook shows a mid-single-digit decline for light ICE vehicles and a single-digit decline for commercial vehicles.
• Soft Europe Volumes: Q4 growth in Asia and the Americas was partially offset by weak sales in Europe.
• Limited growth profile: The 2026 revenue guidance suggests top-line expansion in a low-demand environment.
• Stable, does not increase margins: EBITDA margin guidance of 13.7%–14.3% suggests a modest increase in incremental margins.
• High ICE concentration: The Core Fuel Systems business remains tied to internal combustion platforms amid electrification trends.
• Reclassification: OES reporting changes may affect year-to-year comparisons.
• Increased buyback focus: Up to $750 million in repurchases prioritize capital returns over potential reinvestments.
• Maximum rate target: Net profit is expected to go to ~1.5x from 1.3x.
• Usage dependencies: Free cash flow targets assume sustainable cost control and stable industrial conditions.