AUBURN HILLS - PHINIA Inc. (NYSE: PHIN), a leader in premium fuel systems, electrical systems, and aftermarket products, today reported its fourth quarter and full year ended December 31, 2023 results.
Fourth Quarter Highlights: U.S. GAAP net sales of $882 million, an increase of 3.6% compared with Q4 2022.
Excluding $24 million of contract manufacturing sales, sales were up slightly compared to Q4 2022. Positive customer pricing, positive FX and growth in light vehicle original equipment (OE) sales were partially offset by lower commercial vehicle (CV) OE sales in China.
Operating income of $81 million and adjusted operating income of $89 million, resulting in an operating margin of 9.2% and an adjusted operating margin of 10.4%, a year-over-year decrease of 100 basis points (bps) and 80 bps, respectively.
Q4 2023 segment adjusted operating margins were healthy at 12.6%, 90 bps ahead of the average segment adjusted operating margin for the first 9 months of the year. Operating margins declined from the prior year primarily from lower CV volumes in China and higher non-commodity inflationary costs that were not fully recovered from customers.
U.S. GAAP net earnings of $0.70 per diluted share.
Excluding $0.01 per diluted share related to non-comparable items (detailed in the non-GAAP appendix below), adjusted net earnings of $0.71 per diluted share.
Net earnings of $33 million with net margin of 3.7% and adjusted EBITDA of $127 million with adjusted EBITDA margin of 14.8%, a year-over-year decrease of 20 bps.
Net cash provided by operating activities of $62 million. o Adjusted free cash flow was $55 million.
Full Year 2023 Highlights: U.S. GAAP net sales of $3,500 million, an increase of 4.5% compared with 2022.
Excluding $50 million of contract manufacturing sales, sales were up slightly compared to 2022. Positive customer pricing and growth in light vehicle OE sales was partially offset by lower CV OE sales in China and weaker foreign currency translation effect, primarily Chinese Renminbi.
Operating income of $241 million and adjusted operating income of $347 million, resulting in an operating margin of 6.9% and an adjusted operating margin of 10.1%, a year-over-year decrease of 260 bps and 80 bps, respectively.
Operating margins declined primarily from lower CV volumes in China and higher non-commodity inflationary costs that were not fully recovered from customers.
U.S. GAAP net earnings of $2.17 per diluted share.
Excluding $1.96 per diluted share related to non-comparable items (detailed in the non-GAAP appendix below), adjusted net earnings of $4.13 per diluted share.
Net earnings of $102 million with net margin of 2.9% and adjusted EBITDA of $490 million with adjusted EBITDA margin of 14.2%, a year-over-year decrease of 90 bps.
Net cash provided by operating activities of $250 million. o Adjusted free cash flow was $161 million.
Key Wins in Strategic Growth Markets: New business wins remained strong across all end markets. Notable examples of new business awards in Q4 include: Conquest business win to supply GDi fuel system to a leading OEM specializing in hybrid and low emission powertrain technology in the light vehicle segment, for their European and Asian business.
Contract to supply next generation heavy duty Diesel Fuel Systems to a leading Global OEM, extending existing relationship in core commercial vehicle segment.
Important business win to supply medium duty Diesel Fuel Systems to a leading Global OEM, securing existing business and expanding market share in the commercial vehicle segment.
Brady Ericson, President, and Chief Executive Officer of PHINIA commented: 'Our Q4 results were stronger than expected as the North American strike impact was lower than anticipated, foreign currency moved in our favor, and we executed well with strong cost controls. Working capital continued to improve from Q3 as the team focused on efficiency. We continue to demonstrate resilient core operational performance with total segment adjusted operating margins coming in stronger than the first 9-month average results. I'm pleased with our teams' focus on serving our customers while closing out 2023 with solid cost and margin performance. PHINIA continues to win new business at a record pace that we expect will support average annual low single digit top line growth through this decade. We ended the quarter with $365 million in cash on hand and net leverage of less than 1 times EBITDA - leaving us in a solid financial position.
During the quarter, we continued to return capital to our shareholders paying another roughly $11 million in dividends and buying back our shares at an increased pace, repurchasing $15 million in the quarter for a total of $24 million in 2023. We expect to continue to be opportunistic in terms of future share repurchases.'
About PHINIA
PHINIA is an independent, market-leading, premium solutions and components provider with over 100 years of manufacturing expertise and industry relationships, with a strong brand portfolio that includes DELPHI, DELCO REMY and HARTRIDGE. With 13,200 employees across 44 locations in 20 countries, PHINIA is headquartered in Auburn Hills, Michigan, USA.
Working across commercial vehicle and industrial applications (heavy-duty and medium-duty trucks, off-highway construction, marine and agricultural), and light vehicles (passenger cars, trucks, vans and sport-utility vehicles), we develop fuel systems, electrical systems and aftermarket solutions designed to keep combustion engines operating at peak performance, as cleanly and efficiently as possible, while at the same time investing in future technologies that will unlock the potential of alternative fuels.
By providing what the market needs today, to become more efficient and sustainable, while also developing innovative products and solutions designed to contribute to a cleaner tomorrow, we are the partner of choice for a diverse array of industrial and aftermarket customers -powering our shared journey toward a carbon-neutral and carbon-free tomorrow.
Forward-Looking Statements: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements other than historical fact that provide current expectations or forecasts of future events based on certain assumptions and are not guarantees of future performance. Forward-looking statements use words such as 'anticipate,' 'believe,' 'continue,' 'could,' 'designed,' 'effect,' 'estimate,' 'evaluate,' 'expect,' 'forecast,' 'goal,' 'initiative,' 'intend,' 'likely,' 'may,' 'outlook,' 'plan,' 'potential,' 'predict,' 'project,' 'pursue,' 'seek,' 'should,' 'target,' 'when,' 'will,' 'would,' or other words of similar meaning.
Forward-looking statements are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and which could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. Risks, uncertainties, and factors that could cause actual results to differ materially from those implied by these forward-looking statements include, but are not limited to: adverse changes in general business and economic conditions, including recessions, adverse market conditions or downturns impacting the vehicle and industrial equipment industries; our ability to deliver new products, services and technologies in response to changing consumer preferences, increased regulation of greenhouse gas emissions, and acceleration of the market for electric vehicles; competitive industry conditions; failure to identify, consummate, effectively integrate or realize the expected benefits from acquisitions or partnerships; pricing pressures from original equipment manufacturers (OEMs); inflation rates and volatility in the costs of commodities used in the production of our products; changes in U.S. administrative policy, including changes to existing trade agreements and any resulting changes in international trade relations; our ability to protect our intellectual property; failure of or disruption in our information technology infrastructure, including a disruption related to cybersecurity; our ability to identify, attract, retain and develop a qualified global workforce; difficulties launching new vehicle programs; failure to achieve the anticipated savings and benefits from restructuring and product portfolio optimization actions; extraordinary events (including natural disasters or extreme weather events), political disruptions, terrorist attacks, pandemics or other public health crises, and acts of war; risks related to our international operations; the impact of economic, political, and market conditions on our business in China; our reliance on a limited number of OEM customers; supply chain disruptions; work stoppages, production shutdowns and similar events or conditions; governmental investigations and related proceedings regarding vehicle emissions standards; current and future environmental and health and safety laws and regulations; the impact of climate change and regulations related to climate change; liabilities related to product warranties, litigation and other claims; compliance with legislation, regulations, and policies, investigations and legal proceedings, and new interpretations of existing rules and regulations; tax audits and changes in tax laws or tax rates taken by taxing authorities; volatility in the credit market environment; impairment charges on goodwill and indefinite-lived intangible assets; the impact of changes in interest rates and asset returns on our pension funding obligations; the impact of restrictive credit agreement covenants and requirements on our financial and operating flexibility; our ability to achieve some or all of the benefits that we expect to achieve from the Spin-Off; other risks relating to the Spin-Off, including a delay or inability to transition key infrastructure, services and solutions, a determination that the Spin-Off does not qualify as tax-free for U.S. federal income tax purposes, restrictions under the Tax Matters Agreement, and our or BorgWarner Inc.'s failure to perform under various transaction agreements and other risks and uncertainties described in our reports filed from time to time with the Securities and Exchange Commission.
We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Contact:
Michael Heifler
Tel: +1 947-262-1992
Email: investors@phinia.com
Kevin Price
Global Brand & Communications Director
Tel: +44 (0) 7795 463871
Email: media@phinia.com
PHINIA INC. 
