COVER
COVER - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 01, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-41708 | |
Entity Registrant Name | PHINIA INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 92-2483604 | |
Entity Address, Address Line One | 3000 University Drive | |
Entity Address, City or Town | Auburn Hills, | |
Entity Address, State or Province | MI | |
Entity Address, Postal Zip Code | 48326 | |
City Area Code | (248) | |
Local Phone Number | 732-1900 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | PHIN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 46,685,317 | |
Entity Central Index Key | 0001968915 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash, cash equivalents and restricted cash | $ 367 | $ 251 |
Receivables, net | 1,175 | 891 |
Inventories | 529 | 459 |
Prepayments and other current assets | 53 | 40 |
Total current assets | 2,124 | 1,641 |
Property, plant and equipment, net | 889 | 924 |
Investments and long-term receivables | 130 | 325 |
Goodwill | 486 | 490 |
Other intangible assets, net | 411 | 432 |
Other non-current assets | 151 | 262 |
Total assets | 4,191 | 4,074 |
LIABILITIES AND EQUITY | ||
Short-term borrowings | 87 | 0 |
Accounts payable | 817 | 686 |
Other current liabilities | 417 | 484 |
Total current liabilities | 1,321 | 1,170 |
Long-term debt | 713 | 28 |
Retirement-related liabilities | 94 | 79 |
Other non-current liabilities | 171 | 1,154 |
Total liabilities | 2,299 | 2,431 |
Commitments and contingencies (Note 18) | ||
Common Stock | 1 | 0 |
Additional paid-in capital | 2,023 | 0 |
Retained deficit | (1) | 0 |
Former parent investment | 0 | 1,731 |
Accumulated other comprehensive loss | (122) | (88) |
Treasury stock | (9) | 0 |
Total equity | 1,892 | 1,643 |
Total liabilities and equity | $ 4,191 | $ 4,074 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Net sales | $ 896 | $ 859 | $ 2,618 | $ 2,497 |
Cost of sales | 719 | 658 | 2,080 | 1,964 |
Gross profit | 177 | 201 | 538 | 533 |
Selling, general and administrative expenses | 104 | 100 | 306 | 301 |
Other operating expense (income), net | 15 | (10) | 60 | 1 |
Operating income | 58 | 111 | 172 | 231 |
Equity in affiliates’ earnings, net of tax | (2) | (5) | (8) | (8) |
Interest expense | 22 | 5 | 34 | 14 |
Interest income | (4) | (2) | (9) | (3) |
Other postretirement income | 0 | (8) | (1) | (25) |
Earnings before income taxes | 42 | 121 | 156 | 253 |
Provision for income taxes | 31 | 32 | 75 | 66 |
Net earnings | $ 11 | $ 89 | $ 81 | $ 187 |
Earnings per share — basic (in dollars per share) | $ 0.24 | $ 1.89 | $ 1.72 | $ 3.98 |
Earnings per share— diluted (in dollar per share) | $ 0.24 | $ 1.89 | $ 1.72 | $ 3.98 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 47 | 47 | 47 | 47 |
Diluted (in shares) | 47.1 | 47 | 47 | 47 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Statement of Comprehensive Income [Abstract] | |||||
Net earnings | $ 11 | $ 89 | $ 81 | $ 187 | |
Other comprehensive loss | |||||
Foreign currency translation adjustments | [1] | (58) | (99) | (28) | (186) |
Defined benefit pension plans | [1] | (2) | (6) | (3) | (13) |
Hedge instruments | [1] | (1) | 1 | (3) | 2 |
Total other comprehensive loss | (61) | (104) | (34) | (197) | |
Comprehensive (loss) income | $ (50) | $ (15) | $ 47 | $ (10) | |
[1]Net of income taxes. |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
OPERATING | ||
Net earnings | $ 81 | $ 187 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and tooling amortization | 105 | 109 |
Intangible asset amortization | 21 | 21 |
Restructuring expense, net of cash paid | 1 | 2 |
Stock-based compensation expense | 7 | 7 |
Deferred income tax expense | 2 | 0 |
Other non-cash adjustments, net | (1) | (2) |
Adjustments to reconcile net earnings to net cash provided by operating activities | 216 | 324 |
Changes in assets and liabilities, excluding foreign currency translation adjustments: | ||
Receivables | (123) | (149) |
Inventories | (60) | (75) |
Prepayments and other current assets | (10) | 8 |
Accounts payable and other current liabilities | 169 | 36 |
Prepaid taxes and income taxes payable | 33 | 24 |
Other assets and liabilities | (37) | (46) |
Net cash provided by operating activities | 188 | 122 |
INVESTING | ||
Capital expenditures, including tooling outlays | (117) | (86) |
Payments for investment in equity securities | (2) | 0 |
Proceeds from asset disposals and other, net | 2 | 6 |
Net cash used in investing activities | (117) | (80) |
FINANCING | ||
Proceeds from issuance of long-term debt, net of discount | 708 | 0 |
Payments for debt issuance costs | (14) | 0 |
Borrowings under Revolving Facility | 75 | 0 |
Repayments of debt, including current portion | (1) | 0 |
Purchase of noncontrolling interest | 0 | (3) |
Dividends paid to PHINIA stockholders | (12) | 0 |
Payments for purchase of treasury stock | (9) | 0 |
Net cash provided by (used in) financing activities | 50 | (103) |
Effect of exchange rate changes on cash | (5) | (28) |
Net increase (decrease) in cash and cash equivalents | 116 | (89) |
Cash and cash equivalents at beginning of year | 251 | 259 |
Cash and cash equivalents at end of period | 367 | 170 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Interest, net | 13 | (3) |
Income taxes, net of refunds | 59 | 42 |
Non-cash investing transactions: | ||
Period end accounts payable related to property, plant, and equipment purchases | 31 | 29 |
Related Party | ||
FINANCING | ||
Cash outflows related to debt due to former parent | (728) | (113) |
Cash inflows related to debt due from former parent | 36 | 29 |
Distribution to former parent | $ (5) | $ (16) |
INTRODUCTION AND TRANSITION TO
INTRODUCTION AND TRANSITION TO STANDALONE COMPANY | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
INTRODUCTION AND TRANSITION TO STANDALONE COMPANY | INTRODUCTION The accompanying Condensed Consolidated Financial Statements and notes present the condensed consolidated statements of operations, balance sheets, and cash flows of PHINIA Inc. (“PHINIA” or the “Company”). PHINIA is a leader in the development, design and manufacture of integrated components and systems that optimize performance, increase efficiency and reduce emissions in combustion and hybrid propulsion for commercial vehicles and industrial applications (medium-duty and heavy-duty trucks, buses and other off-highway construction, marine, agricultural and industrial applications) and light vehicles (passenger cars, trucks, vans and sport-utility vehicles). The Company is a global supplier to most major original equipment manufacturers (“OEMs”) seeking to meet and exceed increasingly stringent global regulatory requirements and satisfy consumer demands for an enhanced user experience. Additionally, the Company offers a wide range of original equipment service (“OES”) solutions and remanufactured products as well as an expanded range of products for the independent (non-OEM) aftermarket. Transition to Standalone Company On December 6, 2022, BorgWarner Inc. (“BorgWarner,” or “Former Parent”) announced plans for the complete legal and structural separation of BorgWarner’s Fuel Systems and Aftermarket businesses from BorgWarner by the spin-off of its wholly-owned subsidiary, PHINIA, which was formed on February 9, 2023 (the “Spin-Off”). |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Prior to the Spin-Off on July 3, 2023, the historical financial statements of PHINIA were prepared on a stand-alone combined basis and were derived from BorgWarner’s consolidated financial statements and accounting records as if the Fuel Systems and Aftermarket businesses of BorgWarner had been part of PHINIA for all periods presented. Accordingly, for periods prior to July 3, 2023, our financial statements are presented on a combined basis and for the periods subsequent to July 3, 2023 are presented on a consolidated basis (all periods hereinafter are referred to as “consolidated financial statements”). The Company's Condensed Consolidated Financial Statements were prepared in accordance with accounting principles in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Certain information and footnote disclosures normally included in annual financial statements were condensed or omitted as permitted by such rules and regulations. In the opinion of management, all normal recurring adjustments necessary for a fair statement of results have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The balance sheet as of December 31, 2022 was derived from the audited financial statements as of that date. Certain amounts for the prior periods presented were reclassified to conform to the current period presentation. Amounts that were previously presented as Due from BorgWarner, current and Due from BorgWarner, non-current are now presented within Receivables, net and Investments and long-term receivables, respectively. Amounts that were previously presented as Due to BorgWarner, current are now presented within Accounts payable and Other current liabilities. Amounts that were previously presented in Due to BorgWarner, non-current are now presented in Other non-current liabilities. Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and accompanying notes, as well as amounts of revenues and expenses reported during the periods covered by those financial statements and accompanying notes. The Condensed Consolidated Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as a standalone company during the periods presented prior to the Spin-Off. The Condensed Consolidated Statements of Operations include all revenues and costs directly attributable to the Company, including costs for facilities, functions, and services utilized. Costs for certain centralized functions and programs provided and administered by BorgWarner were charged directly to the Company prior to Spin-Off. These centralized functions and programs included, but were not limited to research and development and information technology. A portion of BorgWarner’s total corporate expenses were allocated to the Company for services rendered by BorgWarner prior to the Spin-Off. These expenses included the cost of corporate functions and resources, including, but not limited to, executive management, finance, accounting, legal, human resources, research and development and sales. Additionally, a portion of the Company’s corporate expenses were allocated to BorgWarner for charges incurred related to subsidiaries of BorgWarner historically supported by the Company, primarily related to information technology. These expenses were allocated based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional net revenues, legal entities, headcount or weighted-square footage, as applicable. The Company considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to, or the benefit received by, both the Company and BorgWarner during the periods presented. However, the allocations may not reflect the expenses the Company would have incurred if the Company had been a standalone company for the periods presented prior to July 3, 2023. The nine months ended September 30, 2023 included net corporate allocation expenses incurred prior to the Spin-Off totaling $89 million. For the three and nine months ended September 30, 2022 net corporate allocation expenses totaled $26 million and $95 million, respectively. Corporate allocation expenses were primarily included in Selling, general and administrative expenses. |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS The Company manufactures and sells products, primarily to OEMs of commercial vehicle industrial applications and light vehicles, to certain tier one vehicle systems suppliers and into the aftermarket. The Company’s payment terms are based on customary business practices and vary by customer type and products offered. The Company has evaluated the terms of its arrangements and determined that they do not contain significant financing components. Generally, revenue is recognized upon shipment or delivery; however, a limited number of the Company’s customer arrangements for its highly customized products with no alternative use provide the Company with the right to payment during the production process. As a result, for these limited arrangements, revenue is recognized as goods are produced and control transfers to the customer using the input cost-to-cost method. The Company recorded a contract asset of $2 million at both September 30, 2023 and December 31, 2022 for these arrangements. These amounts are reflected in Prepayments and other current assets in the Company’s Condensed Consolidated Balance Sheets. In limited instances, certain customers have provided payments in advance of receiving related products, typically at the onset of an arrangement prior to the beginning of production. These contract liabilities are reflected as Other current liabilities in the Condensed Consolidated Balance Sheets and were $3 million at both September 30, 2023 and December 31, 2022. These amounts are reflected as revenue over the term of the arrangement (typically 3 to 7 years) as the underlying products are shipped and represent the Company’s remaining performance obligations as of the end of the period. The following table represents a disaggregation of revenue from contracts with customers by reportable segment and region for the three and nine months ended September 30, 2023 and 2022. Refer to Note 21, “Reportable Segments And Related Information” to the Condensed Consolidated Financial Statements, for more information. Three months ended September 30, 2023 (In millions) Fuel Systems Aftermarket Total Americas $ 199 $ 193 $ 392 Europe 232 122 354 Asia 130 20 150 Total $ 561 $ 335 $ 896 Three months ended September 30, 2022 (In millions) Fuel Systems Aftermarket Total Americas $ 142 $ 207 $ 349 Europe 216 101 317 Asia 176 17 193 Total $ 534 $ 325 $ 859 Nine months ended September 30, 2023 (In millions) Fuel Systems Aftermarket Total Americas $ 537 $ 591 $ 1,128 Europe 711 350 1,061 Asia 373 56 429 Total $ 1,621 $ 997 $ 2,618 Nine months ended September 30, 2022 (In millions) Fuel Systems Aftermarket Total Americas $ 408 $ 604 $ 1,012 Europe 686 301 987 Asia 451 47 498 Total $ 1,545 $ 952 $ 2,497 |
RESEARCH AND DEVELOPMENT COSTS
RESEARCH AND DEVELOPMENT COSTS | 9 Months Ended |
Sep. 30, 2023 | |
Research and Development [Abstract] | |
RESEARCH AND DEVELOPMENT COSTS | RESEARCH AND DEVELOPMENT COSTSThe Company’s net research & development (“R&D”) expenditures are primarily included in Selling, general and administrative expenses of the Condensed Consolidated Statements of Operations. Customer reimbursements are netted against gross R&D expenditures as they are considered a recovery of cost. Customer reimbursements for prototypes are recorded net of prototype costs based on customer contracts, typically either when the prototype is shipped or when it is accepted by the customer. Customer reimbursements for engineering services are recorded when performance obligations are satisfied in accordance with the contract. Financial risks and rewards transfer upon shipment, acceptance of a prototype component by the customer or upon completion of the performance obligation as stated in the respective customer agreement. The Company has various customer arrangements relating to R&D activities that it performs at its various R&D locations. The following table presents the Company’s gross and net expenditures on R&D activities: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Gross R&D expenditures $ 45 $ 49 $ 143 $ 151 Customer reimbursements (21) (25) (62) (73) Net R&D expenditures $ 24 $ 24 $ 81 $ 78 |
OTHER OPERATING EXPENSE (INCOME
OTHER OPERATING EXPENSE (INCOME), NET | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
OTHER OPERATING EXPENSE (INCOME), NET | OTHER OPERATING EXPENSE (INCOME), NET Items included in Other operating expense (income), net consist of: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Merger, acquisition and divestiture expense $ 13 $ 5 $ 72 $ 27 Restructuring 4 3 10 8 Related-party royalty income — (9) (17) (22) Related-party R&D income — (3) (2) (9) Asset impairment — — — 5 Other income, net (2) (6) (3) (8) Other operating expense (income), net $ 15 $ (10) $ 60 $ 1 Merger acquisition and divestiture expense: During the three and nine months ended September 30, 2023 and 2022, the Company recorded merger, acquisition and divestiture expense, primarily related to professional fees associated with the separation of the Company. Related-party royalty income: The Company participated in royalty arrangements with BorgWarner businesses prior to Spin-Off, which involved the licensing of the Delphi Technologies trade name and product-related intellectual properties. Related-party R&D income: The Company provided application testing and other R&D services for BorgWarner businesses prior to Spin-Off. |
RESTRUCTURING
RESTRUCTURING | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING | RESTRUCTURING The Company’s restructuring expenditures are primarily included in Other operating expense (income), net of the Condensed Consolidated Statements of Operations. The Company’s restructuring activities are undertaken as necessary to execute management’s strategy and streamline operations, consolidate and take advantage of available capacity and resources, and ultimately achieve net cost reductions. Restructuring activities include efforts to integrate and rationalize the Company’s business and to relocate operations to best-cost locations. The Company’s restructuring expenses consist primarily of employee termination benefits (principally severance and/or other termination benefits) and other costs, which are primarily professional fees and costs related to equipment moves. Three months ended September 30, 2023 Nine months ended September 30, 2023 (in millions) Fuel Systems Aftermarket Total Fuel Systems Aftermarket Total Employee termination benefits $ 3 $ — $ 3 $ 7 $ 1 $ 8 Other 1 — 1 2 — 2 Total restructuring expense $ 4 $ — $ 4 $ 9 $ 1 $ 10 Three months ended September 30, 2022 Nine months ended September 30, 2022 (in millions) Fuel Systems Aftermarket Total Fuel Systems Aftermarket Total Employee termination benefits $ — $ — $ — $ 2 $ — $ 2 Other 3 — 3 6 — 6 Total restructuring expense $ 3 $ — $ 3 $ 8 $ — $ 8 The following table displays a roll forward of the restructuring liability recorded within the Company’s Condensed Consolidated Balance Sheets and the related cash flow activity: (in millions) Employee termination benefits Other Total Balance at January 1, 2023 $ 20 $ — $ 20 Restructuring expense, net 8 2 10 Cash payments (17) (2) (19) Balance at September 30, 2023 11 — 11 Less: Non-current restructuring liability (1) — (1) Current restructuring liability at September 30, 2023 $ 10 $ — $ 10 (in millions) Employee termination benefits Other Total Balance at January 1, 2022 $ 60 $ — $ 60 Restructuring expense, net 2 6 8 Cash payments (36) (5) (41) Foreign currency translation adjustment and other (4) — (4) Balance at September 30, 2022 22 1 23 Less: Non-current restructuring liability (5) — (5) Current restructuring liability at September 30, 2022 $ 17 $ 1 $ 18 During the three and nine months ended September 30, 2023, the Company recorded $4 million and $10 million, respectively, of restructuring costs for individually approved restructuring actions that primarily related to reductions in headcount in the Fuel Systems segment. In 2019, the Company announced a restructuring plan to reshape and realign its global technical center footprint and reduce salaried and contract staff. The Company recorded charges of $8 million during the nine months ended September 30, 2022, primarily related to employee severance and equipment moves in the Fuel Systems segment. The actions under this program are complete. Estimates of restructuring expense are based on information available at the time such charges are recorded. Due to the inherent uncertainty involved in estimating restructuring expenses, actual amounts paid for such activities may differ from amounts initially recorded. Accordingly, the Company may record revisions of previous estimates by adjusting previously established accruals. The Company continues to evaluate different options across its operations to reduce existing structural costs. The Company will recognize restructuring expense associated with any future actions at the time they are approved and become probable or are incurred. Any future actions could result in significant restructuring expense. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s provision for income taxes is based upon an estimated annual effective tax rate for the year applied to domestic and foreign income. On a quarterly basis, the annual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter. The Company’s effective tax rate for the three months ended September 30, 2023 and 2022 was 74% and 26%, respectively. The effective tax rate for the three months ended September 30, 2023 increased as compared to the prior year as a result of a change in the jurisdictional mix of pre-tax earnings, most notably an increase in pre-tax losses where no tax benefit is recognized, as well as an increase in the estimated annual effective tax rate in the current quarter due to increases in the U.S. taxes on foreign earnings based on the post Spin-Off structure. The Company’s effective tax rate for the nine months ended September 30, 2023 and 2022 was 48% and 26%, respectively. The effective tax rate for the nine months ended September 30, 2023 increased as compared to the prior year as a result of a change in the jurisdictional mix of pre-tax earnings, most notably an increase in pre-tax losses where no tax benefit is recognized. The estimated annual effective tax rate increased in the current quarter due to increases in the U.S. taxes on foreign earnings based on the post Spin-Off structure. The annual effective tax rates differ from the U.S. statutory rate primarily due to foreign rates which vary from those in the U.S., jurisdictions with pretax losses for which no tax benefit could be realized, U.S. taxes on foreign earnings, and permanent differences between book and tax treatment for certain items including enhanced deduction of research and development expenses in certain jurisdictions. For periods ended on or prior to July 3, 2023, the Company’s operations have been included in BorgWarner’s U.S. federal consolidated tax return, certain foreign tax returns, and certain state tax returns. For the purposes of these financial statements, the Company’s income tax provision was computed as if the Company filed separate tax returns (i.e., as if the Company had not been included in the consolidated income tax return group with BorgWarner). The separate return method applies ASC 740 to the Condensed Consolidated Financial Statements of each member of a consolidated tax group as if the group member were a separate taxpayer. As a result, actual tax transactions included in the consolidated financial statements of BorgWarner may not be included in these Condensed Consolidated Financial Statements. Further, the Company’s tax results as presented in the Condensed Consolidated Financial Statements may not be reflective of the results that the Company expects to generate in the future. Also, the tax treatment of certain items reflected in the Condensed Consolidated Financial Statements may not be reflected in the Consolidated Financial Statements and tax returns of BorgWarner. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES A summary of Inventories is presented below: (in millions) September 30, December 31, Raw material and supplies $ 313 $ 275 Work-in-progress 38 39 Finished goods 178 145 Inventories $ 529 $ 459 |
OTHER CURRENT AND NON-CURRENT A
OTHER CURRENT AND NON-CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER CURRENT AND NON-CURRENT ASSETS | OTHER CURRENT AND NON-CURRENT ASSETS (in millions) September 30, December 31, Prepayments and other current assets: Prepaid taxes $ 16 $ 11 Prepaid customer tooling 8 3 Customer return assets 7 6 Deposits 4 3 Prepaid insurance 4 — Prepaid engineering 3 3 Other 11 14 Total prepayments and other current assets $ 53 $ 40 Investments and long-term receivables: Long-term receivables $ 80 $ 279 Investment in equity affiliates 46 44 Investment in equity securities 4 2 Total investments and long-term receivables $ 130 $ 325 Other non-current assets: Deferred income taxes $ 58 $ 157 Operating leases 64 80 Other 29 25 Total other non-current assets $ 151 $ 262 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLESDuring the fourth quarter of each year, the Company assesses its goodwill assigned to each of its reporting units for impairment by either performing a qualitative assessment or a quantitative analysis. In addition, the Company may test goodwill in between annual test dates if an event occurs or circumstances change that could more-likely-than-not reduce the fair value of a reporting unit below its carrying value. Similar to goodwill, the Company performs an annual impairment test for indefinite-lived intangibles other than goodwill (trade names) using a qualitative analysis during the fourth quarter each year to determine if it is more-likely-than-not that the fair value of the intangible asset is less than its respective carrying value. If the Company elects to perform or is required to perform a quantitative analysis, the test consists of a comparison of the fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date. No events or circumstances were noted in the first nine months of 2023 requiring additional assessment or testing. Future changes in the judgments, assumptions and estimates from those used in acquisition-related valuations and goodwill impairment testing, including discount rates or future operating results and related cash flow projections, could result in significantly different estimates of the fair values in the future. An increase in discount rates, a reduction in projected cash flows or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect the Company’s financial statements in any given year. A summary of the components in the carrying amount of goodwill as of September 30, 2023 and December 31, 2022 is as follows: (in millions) Fuel Systems Aftermarket Total Gross goodwill balance, December 31, 2022 $ 58 $ 545 $ 603 Accumulated impairment losses — (113) (113) Net goodwill balance, December 31, 2022 $ 58 $ 432 $ 490 Goodwill during the period: Translation adjustment — (4) (4) Net goodwill balance, September 30, 2023 $ 58 $ 428 $ 486 The Company’s other intangible assets consist of the following: September 30, 2023 December 31, 2022 (in millions) Estimated useful lives (years) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Amortized intangible assets: Patented and unpatented technology 14 - 15 $ 144 $ 39 $ 105 $ 144 $ 30 $ 114 Customer relationships 14 - 15 263 97 166 263 85 178 Total amortized intangible assets 407 136 271 407 115 292 Unamortized trade names 140 — 140 140 — 140 Total other intangible assets $ 547 $ 136 $ 411 $ 547 $ 115 $ 432 |
PRODUCT WARRANTY
PRODUCT WARRANTY | 9 Months Ended |
Sep. 30, 2023 | |
Product Warranties Disclosures [Abstract] | |
PRODUCT WARRANTY | PRODUCT WARRANTYThe Company provides warranties on some, but not all, of its products. The warranty terms are typically from one The following table summarizes the activity in the product warranty accrual accounts: (in millions) 2023 2022 Beginning balance, January 1 $ 60 $ 68 Adjustments of prior estimates 1 5 Provisions for current period sales 32 28 Payments (35) (35) Other, primarily translation adjustment (1) (4) Ending balance, September 30, $ 57 $ 62 The product warranty liability is classified in the Condensed Consolidated Balance Sheets as follows: (in millions) September 30, December 31, 2022 Other current liabilities $ 30 $ 32 Other non-current liabilities 27 28 Total product warranty liability $ 57 $ 60 |
NOTES PAYABLE AND DEBT
NOTES PAYABLE AND DEBT | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE AND DEBT | NOTES PAYABLE AND DEBT As of September 30, 2023 and December 31, 2022, the Company had debt outstanding as follows: (in millions) September 30, December 31, 2022 Short-term borrowings $ 75 $ — Long-term debt 5.000% Senior notes due 10/01/25 ($800 million par value) $ 25 $ 26 $300 million Term Loan A Facility (net of $3 unamortized issuance costs) 297 — $425 million Term Loan B Facility (net of $6 unamortized issuance costs and $16 unamortized discount) 403 — Other long-term debt — 2 Total long-term debt $ 725 $ 28 Less: current portion 12 — Long-term debt, net of current portion $ 713 $ 28 As of September 30, 2023, the estimated fair values of the Company’s senior unsecured notes, Term Loan A Facility and Term Loan B Facility (each as defined below) totaled $753 million, which is $28 million higher than carrying value for the same period. As of December 31, 2022, the estimated fair value of the Company’s senior unsecured notes totaled $23 million, which was $3 million higher than carrying value for the same period. Fair market values of the long-term debt are developed using observable values for similar debt instruments, which are considered Level 2 inputs as defined by ASC Topic 820. The carrying values of the Company’s other debt facilities approximate fair value. The fair value estimates do not necessarily reflect the values the Company could realize in the current markets. Credit Agreement On July 3, 2023, the Company entered into a $1.225 billion Credit Agreement consisting of a $500 million revolving credit facility (the “Revolving Facility”), a $300 million Term Loan A Facility (the “Term Loan A Facility”) and a $425 million Term Loan B Facility (the “Term Loan B Facility”; together with the Revolving Facility and the Term Loan A Facility, collectively, the “Facilities”) in correlation with the Spin-Off that occurred on the same date. Subject to extension by the lenders, at their option, upon the Company’s request, the Facilities mature on July 3, 2028; provided, however, that if earlier, the Revolving Facility and the Term Loan A Facility will mature 91 calendar days prior to the scheduled maturity of the Term Loan B Facility or any refinancing or replacement thereof in an aggregate principal amount exceeding $100 million that is secured pari passu with the Revolving Facility and the Term Loan A Facility and matures on or prior to July 3, 2028. Borrowings under the Credit Agreement bear interest at varying rates, depending on the type of loan and, in some cases, the rates of designated benchmarks and the Company’s related election. For borrowings under the Credit Agreement, the Company may choose among the following interest rates: (i) solely in the case of U.S. dollar-denominated loans, an interest rate equal to the highest of (1) the prime rate in effect from time to time, (2) the federal funds effective rate in effect from time to time plus 0.5%, (3) adjusted term Secured Overnight Financing Rate (“SOFR”) (which includes a 0.10% credit spread adjustment to term SOFR) for a one month interest period plus 1.00%, and (4) 1.00%, in each case plus a rate (x) with respect to the Revolving Facility and the Term Loan A Facility, ranging from 1.50% to 2.00% depending on the Company’s consolidated net leverage ratio or (y) with respect to the Term Loan B Facility, 3.00%; or (ii) an interest rate equal to (1) solely in the case of U.S. dollar-denominated loans, adjusted term SOFR, (2) solely in the case of euro-denominated loans, Euro Interbank Offered Rate (“EURIBOR”), or (3) solely in the case of pound sterling-denominated loans, adjusted Sterling Overnight Index Average Reference Rate (“SONIA”) (which includes a 0.0326% credit spread adjustment to SONIA), as applicable, in each case for the applicable interest period plus a rate (x) with respect to adjusted term SOFR for the Revolving Facility and the Term Loan A Facility, EURIBOR and SONIA, ranging from 2.50% to 3.00% depending on our consolidated net leverage ratio, and (y) with respect to adjusted term SOFR for the Term Loan B Facility, 4.00%. Additionally, the Company will pay a quarterly commitment fee based on the actual daily amount of the available Revolving Facility commitment. Proceeds of the Term Loan A Facility and the Term Loan B Facility were used only for certain payments in connection with the Spin-Off and the Credit Agreement. Proceeds of the Revolving Facility were used for certain payments in connection with the Spin-Off and the Credit Agreement and for working capital and general corporate purposes. As of September 30, 2023, the Company had $75 million of outstanding borrowings under the Revolving Facility. The Credit Agreement contains customary covenants relating to us and our subsidiaries concerning, among other things, investments, dispositions of assets, indebtedness, liens on assets, and dividends and other distributions. Solely in respect of the Revolving Facility and the Term Loan A Facility, the Credit Agreement also contains financial covenants requiring (i) the consolidated net leverage ratio of the Company, determined as of the end of each fiscal quarter, not to exceed 3.00 to 1.00 (or, at our election and subject to certain conditions, 3.50 to 1.00 for the period in which such election is made and the next succeeding testing period and, thereafter, 3.25 to 1.00 for the next two succeeding testing periods) and (ii) the consolidated interest coverage ratio of the Company, determined as of the end of each fiscal quarter, to be at least 3.00 to 1.00. The Company was in compliance with all covenants as of September 30, 2023. |
OTHER CURRENT AND NON-CURRENT L
OTHER CURRENT AND NON-CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
OTHER CURRENT AND NON-CURRENT LIABILITIES | OTHER CURRENT AND NON-CURRENT LIABILITIES Additional detail related to liabilities is presented in the table below: (in millions) September 30, December 31, Other current liabilities: Customer related $ 105 $ 96 Payroll and employee related 86 81 Income taxes payable 51 28 Product warranties (Note 10) 30 32 Accrued freight 19 13 Operating leases 17 18 Employee termination benefits (Note 5) 10 16 Deferred engineering 5 17 Other 94 183 Total other current liabilities $ 417 $ 484 Other non-current liabilities: Deferred income taxes $ 60 $ 46 Operating leases 51 67 Product warranties (Note 10) 27 28 Uncertain tax positions 14 37 Deferred income 6 — Due to former parent — 957 Other 13 19 Total other non-current liabilities $ 171 $ 1,154 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS ASC Topic 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques noted in ASC Topic 820: A. Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business. B. Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost). C. Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option-pricing and excess earnings models). The following tables classify assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022: Basis of fair value measurements (in millions) Balance at September 30, 2023 Quoted prices in active markets for identical items Significant other observable inputs Significant unobservable inputs Valuation Assets: Foreign currency contracts $ 1 $ — $ 1 $ — A Liabilities: Foreign currency contracts $ (1) $ — $ (1) $ — A Basis of fair value measurements (in millions) Balance at December 31, 2022 Quoted prices in active markets for identical items Significant other observable inputs Significant unobservable inputs Valuation Assets: Foreign currency contracts $ 7 $ — $ 7 $ — A Liabilities: Foreign currency contracts $ (1) $ — $ (1) $ — A |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS The Company’s financial instruments include cash and cash equivalents, marketable securities and accounts receivable. Due to the short-term nature of these instruments, their book value approximates their fair value. The Company’s financial instruments may also include long-term debt, interest rate and cross-currency swaps, commodity derivative contracts and foreign currency derivative contracts. All derivative contracts are placed with counterparties that have an S&P, or equivalent, investment grade credit rating at the time of the contracts’ placement. An adjustment for non-performance risk is considered in the estimate of fair value in derivative assets based on the counterparty credit default swap (“CDS”) rate. When the Company is in a net derivative liability position, the non-performance risk adjustment is based on its CDS rate. At September 30, 2023 and December 31, 2022, the Company had no derivative contracts that contained credit-risk-related contingent features. The Company uses foreign currency forward and option contracts to protect against exchange rate movements for forecasted cash flows, including capital expenditures, purchases, operating expenses or sales transactions designated in currencies other than the functional currency of the operating unit. In addition, the Company uses foreign currency forward contracts to hedge exposure associated with its net investment in certain foreign operations (net investment hedges). Foreign currency derivative contracts require the Company, at a future date, to either buy or sell foreign currency in exchange for the operating units’ local currency. As of September 30, 2023 and December 31, 2022, the United States dollar equivalent notional values of outstanding currency derivative instruments was $38 million and $309 million, respectively. These amounts were primary related to Euro and British Pound denominated hedging transactions. As of September 30, 2023 and December 31, 2022, the following amounts were recorded in the Condensed Consolidated Balance Sheets as being payable to or receivable from counterparties under ASC Topic 815: (in millions) Assets Liabilities Derivatives designated as hedging instruments Under Topic 815: Balance Sheet Location September 30, 2023 December 31, 2022 Balance Sheet Location September 30, 2023 December 31, 2022 Foreign currency Prepayments and other current assets $ 1 $ 7 Other current liabilities $ 1 $ 1 Effectiveness for cash flow hedges is assessed at the inception of the hedging relationship and quarterly, thereafter. Gains and losses arising from these contracts that are included in the assessment of effectiveness are deferred into accumulated other comprehensive income (loss) (“AOCI”) and reclassified into income as the underlying operating transactions are recognized. These realized gains or losses offset the hedged transaction and are recorded on the same line in the statement of operations. The initial value of any component excluded from the assessment of effectiveness is recognized in income using a systematic and rational method over the life of the hedging instrument. Any difference between the change in fair value of the excluded component and amounts recognized in income under that systematic and rational method are recognized in AOCI. Effectiveness for net investment hedges is assessed at the inception of the hedging relationship and quarterly, thereafter. Gains and losses arising from these contracts that are included in the assessment of effectiveness are deferred into foreign currency translation adjustments and only released when the subsidiary being hedged is sold or substantially liquidated. The initial value of any component excluded from the assessment of effectiveness is recognized in income using a systematic and rational method over the life of the hedging instrument. Any difference between the change in fair value of the excluded component and amounts recognized in income under that systematic and rational method is recognized in AOCI. The table below shows deferred gains (losses) reported in AOCI as well as the amount expected to be reclassified to income in one year or less for designated net investment hedges. The amount expected to be reclassified to income in one year or less assumes no change in the current relationship of the hedged item at September 30, 2023 market rates. (in millions) Deferred loss in AOCI at Gain (loss) expected to be reclassified to income in one year or less Contract Type September 30, 2023 December 31, 2022 Foreign currency $ (6) $ (4) $ — Derivative instruments designated as hedging instruments as defined by ASC Topic 815 held during the period resulted in the following gains and losses recorded in income: Three months ended September 30, 2023 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income (loss) Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded $ 896 $ 719 $ 104 $ (61) Gain (loss) on cash flow hedging relationships: Foreign currency Loss recognized in Other comprehensive income (loss) $ (1) Nine months ended September 30, 2023 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income (loss) Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded $ 2,618 $ 2,080 $ 306 $ (34) Gain (loss) on cash flow hedging relationships: Foreign currency Loss recognized in Other comprehensive income $ (3) Three months ended September 30, 2022 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income (loss) Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded $ 859 $ 658 $ 100 $ (104) Gain (loss) on cash flow hedging relationships: Foreign currency Gain recognized in Other comprehensive loss $ 1 Nine months ended September 30, 2022 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income (loss) Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded $ 2,497 $ 1,964 $ 301 $ (197) Gain (loss) on cash flow hedging relationships: Foreign currency Gain recognized in Other comprehensive income (loss) $ 2 The gains or losses recorded in income related to components excluded from the assessment of effectiveness for derivative instruments designated as cash flow hedges were immaterial for the periods presented. Gains and losses on derivative instruments designated as net investment hedges were immaterial for the periods presented. Derivatives not designated as hedging instruments are used to hedge remeasurement exposures of monetary assets and liabilities denominated in currencies other than the operating units' functional currency. These derivatives resulted in the following gains (losses) recorded in income: (in millions) Three months ended September 30, Nine months ended September 30, Contract Type Location 2023 2022 2023 2022 Foreign Currency Cost of sales $ — $ 3 $ 4 $ — |
RETIREMENT BENEFIT PLANS
RETIREMENT BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
RETIREMENT BENEFIT PLANS | RETIREMENT BENEFIT PLANS PHINIA sponsors various defined contribution savings plans, primarily in the U.S., that allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan specified guidelines. The Company also has a number of defined benefit pension plans, and in connection with the completion of the Spin-Off was required to assume additional defined benefit plan liabilities, along with the associated deferred costs in Accumulated other comprehensive loss. Under specified conditions, the Company will make contributions to the plans and/or match a percentage of the employee contributions up to certain limits. The estimated contributions to the defined benefit pension plans for 2023 are up to $3 million, of which $2 million has been contributed through the first nine months of the year. The components of net periodic benefit income recorded in the Condensed Consolidated Statements of Operations are as follows: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Service cost $ 1 $ 1 $ 2 $ 1 Interest cost 11 6 32 18 Expected return on plan assets (11) (14) (32) (43) Amortization of unrecognized loss — — (1) — Net periodic benefit cost (income) $ 1 $ (7) $ 1 $ (24) The non-service cost components of net periodic benefit cost (income) are included in Other postretirement income in the Condensed Consolidated Statements of Operations. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITYThe changes of the Stockholders’ Equity items during the three and nine months ended September 30, 2023 and 2022, are as follows: (in millions) Issued common stock Additional paid-in capital Treasury stock Retained deficit Former parent investment Accumulated other comprehensive loss Total equity Balance, June 30, 2023 $ — $ — $ — $ — $ 2,053 $ (61) $ 1,992 Net earnings — — — 11 — — 11 Dividends declared ($0.25 per share) — — — (12) — — (12) Purchase of treasury stock — — (9) — — — (9) Other comprehensive loss — — — — — (61) (61) Share-based compensation expense — 3 — — — — 3 Net transfers to former parent — — — — (32) — (32) Reclassification of former parent's net investment and issuance of ordinary shares in connection with Spin-Off 1 2,020 — — (2,021) — — Balance, September 30, 2023 $ 1 $ 2,023 $ (9) $ (1) $ — $ (122) $ 1,892 (in millions) Former parent investment Accumulated other comprehensive loss Noncontrolling interest Total equity Balance, June 30, 2022 $ 1,755 $ (31) $ — $ 1,724 Net earnings 89 — — 89 Other comprehensive loss — (104) — (104) Net transfers from former parent 43 — — 43 Balance, September 30, 2022 $ 1,887 $ (135) $ — $ 1,752 (in millions) Issued common stock Additional paid-in capital Treasury stock Retained deficit Former parent investment Accumulated other comprehensive loss Total equity Balance, December 31, 2022 $ — $ — $ — $ — $ 1,731 $ (88) $ 1,643 Net earnings — — — 11 70 — 81 Dividends declared ($0.25 per share) — — — (12) — — (12) Purchase of treasury stock — — (9) — — — (9) Other comprehensive loss — — — — — (34) (34) Share-based compensation expense — 3 — — — — 3 Net transfers from former parent — — — — 220 — 220 Reclassification of former parent's net investment and issuance of ordinary shares in connection with Spin-Off 1 2,020 — — (2,021) — — Balance, September 30, 2023 $ 1 $ 2,023 $ (9) $ (1) $ — $ (122) $ 1,892 (in millions) Former parent investment Accumulated other comprehensive loss Noncontrolling interest Total equity Balance, December 31, $ 1,647 $ 62 $ 3 $ 1,712 Net earnings 187 — 187 Other comprehensive loss — (197) — (197) Purchase of noncontrolling interest — — (3) (3) Net transfers from former parent 53 — — 53 Balance, September 30, 2022 $ 1,887 $ (135) $ — $ 1,752 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS The following tables summarizes the activity within accumulated other comprehensive loss: (in millions) Foreign currency translation adjustments Defined benefit pension plans Hedge instruments Total Beginning balance, June 30, 2023 $ (55) $ (7) $ 1 $ (61) Comprehensive income (loss) (58) (3) (1) (62) Income taxes associated with comprehensive income — 1 — 1 Ending Balance, September 30, 2023 $ (113) $ (9) $ — $ (122) (in millions) Foreign currency translation adjustments Defined benefit pension plans Hedge instruments Total Beginning balance, June 30, 2022 $ (82) $ 52 $ (1) $ (31) Comprehensive income (loss) (99) (7) 1 (105) Income taxes associated with comprehensive income — 1 — 1 Ending Balance, September 30, 2022 $ (181) $ 46 $ — $ (135) (in millions) Foreign currency translation adjustments Defined benefit pension plans Hedge instruments Total Beginning Balance, December 31, 2022 $ (85) $ (6) $ 3 $ (88) Comprehensive income (loss) (28) (4) (3) (35) Income taxes associated with comprehensive income — 1 — 1 Ending Balance, September 30, 2023 $ (113) $ (9) $ — $ (122) (in millions) Foreign currency translation adjustments Defined benefit pension plans Hedge instruments Total Beginning Balance, December 31, 2021 $ 5 $ 59 $ (2) $ 62 Comprehensive income (loss) (186) (16) 2 (200) Income taxes associated with comprehensive income — 3 — 3 Ending Balance, September 30, 2022 $ (181) $ 46 $ — $ (135) |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES In the course of its business, the Company is party to various commercial and legal claims, actions and complaints, including matters involving warranty claims, intellectual property claims, governmental investigations and related proceedings, including relating to alleged or actual violations of vehicle emissions standards, general liability and various other risks. It is not possible to predict with certainty whether or not the Company will ultimately be successful in any of these commercial and legal matters or, if not, what the impact might be. The Company’s management does not believe that adverse outcomes in any of these commercial and legal claims, actions and complaints are reasonably likely to have a material adverse effect on the Company’s results of operations, financial position or cash flows. An adverse outcome could, nonetheless, be material to the results of operations or cash flows. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONS Pursuant to the Spin-Off, BorgWarner ceased to be a related party to PHINIA and accordingly, no related party transactions or balances have been reported subsequent to July 3, 2023. In connection with the Spin-Off, we entered into a number of agreements with BorgWarner to govern the Spin-Off and provide a framework for the relationship between the parties going forward, including a Transition Services Agreement, Tax Matters Agreement, and certain Contract Manufacturing Agreements. The following discussion summarizes activity between the Company and BorgWarner that occurred prior to the completion of the Spin-Off. Allocation of General Corporate and Other Expenses The Condensed Consolidated Statements of Operations include expenses for certain centralized functions and other programs provided and administered by BorgWarner that were charged directly to the Company prior to the Spin-Off. In addition, for purposes of preparing the financial statements on a carve-out basis, a portion of BorgWarner’s total corporate expenses was allocated to the Company. Similarly, certain centralized expenses incurred by the Company prior to the Spin-Off on behalf of subsidiaries of BorgWarner had been allocated to BorgWarner. See Note 1, “Basis Of Presentation,” for a discussion of the methodology used to allocate corporate expenses for purposes of preparing these financial statements on a carve-out basis for periods prior to July 3, 2023. Net corporate allocation expenses in nine months ended September 30, 2023 totaled $89 million, all of which were incurred prior to the Spin-Off. For the three and nine months ended September 30, 2022 net corporate allocation expenses totaled $26 million and $95 million, respectively. These expenses were primarily included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. Related-Party Royalty Income and Related-Party R&D The Company participated in royalty arrangements and provided applications testing and other R&D services to BorgWarner prior to the Spin-Off. See Note 4, “Other operating expense (income), net” for additional information. Due from BorgWarner In the Condensed Consolidated Balance Sheets, the Company presents $142 million within Accounts receivable and $208 million within Investments and long-term receivables as of December 31, 2022. These amounts were previously presented as Due from BorgWarner, current and Due from BorgWarner, non-current, respectively. Due to BorgWarner In the Condensed Consolidated Balance Sheets, the Company presents $186 million within Accounts payable and $99 million within Other current liabilities. These amounts were previously presented as Due to BorgWarner, current. In addition, the Company presents $957 within Other non-current liabilities as of December 31, 2022. These amounts were previously presented as Due to BorgWarner, non-current. Net Transfers from (to) BorgWarner Net transfers from (to) BorgWarner are included within Former parent investment in the Condensed Consolidated Statements of Changes in Equity. The components of the transfers from (to) BorgWarner are as follows: Nine months ended September 30, (in millions) 2023 2022 General financing activities $ (63) $ (22) Cash pooling and other equity settled balances with BorgWarner (64) (11) Related-party notes converted to equity 260 — Corporate allocations 89 95 Research and development income from BorgWarner (2) (9) Total net transfers from BorgWarner $ 220 $ 53 Exclude non-cash items: Stock-based compensation $ (4) $ (7) Other non-cash activities with BorgWarner, net (16) (32) Related-party notes converted to equity (260) — Cash pooling and intercompany financing activities with BorgWarner, net 55 (30) Total net transfers to BorgWarner per Condensed Consolidated Statements of Cash Flow $ (5) $ (16) |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE The Company presents both basic and diluted earnings per share of common stock (“EPS”) amounts. Basic EPS is calculated by dividing net earnings by the weighted average shares of common stock outstanding during the reporting period. Diluted EPS is calculated by dividing net earnings by the weighted average shares of common stock and common stock equivalents outstanding during the reporting period. For periods prior to July 3, 2023, the denominator for basic and diluted earnings per share was calculated using the 47.0 million PHINIA ordinary shares outstanding immediately following the Spin-Off. The same number of shares was used to calculate basic and diluted earnings per share in those periods since no PHINIA equity awards were outstanding prior to the Spin-Off. The dilutive impact of stock-based compensation is calculated using the treasury stock method. The treasury stock method assumes that the Company uses the assumed proceeds from the exercise of awards to repurchase common stock at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future and compensation cost for future service that the Company has not yet recognized. The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock: Three months ended September 30, Nine months ended September 30, ( in millions, except per share amounts ) 2023 2022 2023 2022 Basic earnings per share: Net earnings $ 11 $ 89 $ 81 $ 187 Weighted average shares of common stock outstanding 47.0 47.0 47.0 47.0 Basic earnings per share of common stock $ 0.24 $ 1.89 $ 1.72 $ 3.98 Diluted earnings per share: Net earnings $ 11 $ 89 $ 81 $ 187 Weighted average shares of common stock outstanding 47.0 47.0 47.0 47.0 Effect of stock-based compensation 0.1 — — — Weighted average shares of common stock outstanding including dilutive shares 47.1 47.0 47.0 47.0 Diluted earnings per share of common stock $ 0.24 $ 1.89 $ 1.72 $ 3.98 |
REPORTABLE SEGMENTS AND RELATED
REPORTABLE SEGMENTS AND RELATED INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
REPORTING SEGMENTS AND RELATED INFORMATION | REPORTABLE SEGMENTS AND RELATED INFORMATION The Company’s business is comprised of two reportable segments, which are further described below. These segments are strategic business groups, which are managed separately as each represents a specific grouping of related automotive components and systems. • Fuel Systems. This segment provides advanced fuel injection systems, fuel delivery modules, canisters, sensors, electronic control modules and associated software. Our highly engineered fuel injection systems portfolio includes pumps, injectors, fuel rail assemblies, engine control modules, and complete systems, including software and calibration services, that reduce emissions and improve fuel economy for traditional and hybrid applications. • Aftermarket. Through this segment, the Company sells products to independent aftermarket customers and OES customers. Its product portfolio includes a wide range of products as well as maintenance, test equipment and vehicle diagnostics solutions. The Aftermarket segment also includes sales of starters and alternators to OEMs. Segment Adjusted Operating Income (“AOI”) is the measure of segment income or loss used by the Company. Segment AOI is comprised of segment operating income adjusted for restructuring, merger, acquisition and divestiture expense, intangible asset amortization expense, impairment charges, other net expenses and other items not reflective of ongoing operating income or loss. The Company believes Segment AOI is most reflective of the operational profitability or loss of its reportable segments. Segment AOI excludes certain corporate costs, which primarily represent corporate expenses not directly attributable to the individual segments. The following tables show segment information and Segment AOI for the Company’s reportable segments: Net Sales by Reportable Segment Three months ended September 30, 2023 Nine months ended September 30, 2023 (in millions) Customers Inter-segment Net Customers Inter-segment Net Fuel Systems $ 561 $ 59 $ 620 $ 1,621 $ 173 $ 1,794 Aftermarket 335 (3) 332 997 4 1,001 Inter-segment eliminations — (56) (56) — (177) (177) Total $ 896 $ — $ 896 $ 2,618 $ — $ 2,618 Three months ended September 30, 2022 Nine months ended September 30, 2022 (in millions) Customers Inter-segment Net Customers Inter-segment Net Fuel Systems $ 534 $ 63 $ 597 $ 1,545 $ 162 $ 1,707 Aftermarket 325 2 327 952 6 958 Inter-segment eliminations — (65) (65) — (168) (168) Total $ 859 $ — $ 859 $ 2,497 $ — $ 2,497 Segment Adjusted Operating Income Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Fuel Systems $ 55 $ 84 $ 160 $ 193 Aftermarket 46 48 143 137 Segment AOI 101 132 303 330 Corporate, including stock-based compensation 19 17 45 61 Related-party royalty income — (9) (17) (22) Merger, acquisition and divestiture expense, net 13 5 72 27 Intangible asset amortization expense 7 7 21 21 Restructuring expense (Note 5) 4 3 10 8 Asset impairments and lease modifications — (2) — 4 Equity in affiliates' earnings, net of tax (2) (5) (8) (8) Interest expense 22 5 34 14 Interest income (4) (2) (9) (3) Other postretirement income — (8) (1) (25) Earnings before income taxes 42 121 156 253 Provision for income taxes 31 32 75 66 Net earnings $ 11 $ 89 $ 81 $ 187 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net earnings | $ 11 | $ 89 | $ 81 | $ 187 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation | Prior to the Spin-Off on July 3, 2023, the historical financial statements of PHINIA were prepared on a stand-alone combined basis and were derived from BorgWarner’s consolidated financial statements and accounting records as if the Fuel Systems and Aftermarket businesses of BorgWarner had been part of PHINIA for all periods presented. Accordingly, for periods prior to July 3, 2023, our financial statements are presented on a combined basis and for the periods subsequent to July 3, 2023 are presented on a consolidated basis (all periods hereinafter are referred to as “consolidated financial statements”). |
Basis of Presentation | The Company's Condensed Consolidated Financial Statements were prepared in accordance with accounting principles in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Certain information and footnote disclosures normally included in annual financial statements were condensed or omitted as permitted by such rules and regulations. In the opinion of management, all normal recurring adjustments necessary for a fair statement of results have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The balance sheet as of December 31, 2022 was derived from the audited financial statements as of that date.Certain amounts for the prior periods presented were reclassified to conform to the current period presentation. Amounts that were previously presented as Due from BorgWarner, current and Due from BorgWarner, non-current are now presented within Receivables, net and Investments and long-term receivables, respectively. Amounts that were previously presented as Due to BorgWarner, current are now presented within Accounts payable and Other current liabilities. Amounts that were previously presented in Due to BorgWarner, non-current are now presented in Other non-current liabilities. |
Use of Estimates | Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and accompanying notes, as well as amounts of revenues and expenses reported during the periods covered by those financial statements and accompanying notes. The Condensed Consolidated Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as a standalone company during the periods presented prior to the Spin-Off. |
Fair Value Measurement | ASC Topic 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques noted in ASC Topic 820: A. Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business. B. Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost). C. Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option-pricing and excess earnings models). |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table represents a disaggregation of revenue from contracts with customers by reportable segment and region for the three and nine months ended September 30, 2023 and 2022. Refer to Note 21, “Reportable Segments And Related Information” to the Condensed Consolidated Financial Statements, for more information. Three months ended September 30, 2023 (In millions) Fuel Systems Aftermarket Total Americas $ 199 $ 193 $ 392 Europe 232 122 354 Asia 130 20 150 Total $ 561 $ 335 $ 896 Three months ended September 30, 2022 (In millions) Fuel Systems Aftermarket Total Americas $ 142 $ 207 $ 349 Europe 216 101 317 Asia 176 17 193 Total $ 534 $ 325 $ 859 Nine months ended September 30, 2023 (In millions) Fuel Systems Aftermarket Total Americas $ 537 $ 591 $ 1,128 Europe 711 350 1,061 Asia 373 56 429 Total $ 1,621 $ 997 $ 2,618 Nine months ended September 30, 2022 (In millions) Fuel Systems Aftermarket Total Americas $ 408 $ 604 $ 1,012 Europe 686 301 987 Asia 451 47 498 Total $ 1,545 $ 952 $ 2,497 |
RESEARCH AND DEVELOPMENT COSTS
RESEARCH AND DEVELOPMENT COSTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Research and Development [Abstract] | |
Schedule of Research and Development Arrangement, Contract to Perform for Others | The following table presents the Company’s gross and net expenditures on R&D activities: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Gross R&D expenditures $ 45 $ 49 $ 143 $ 151 Customer reimbursements (21) (25) (62) (73) Net R&D expenditures $ 24 $ 24 $ 81 $ 78 |
OTHER OPERATING EXPENSE (INCO_2
OTHER OPERATING EXPENSE (INCOME), NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Operating Expense (Income), Net | Items included in Other operating expense (income), net consist of: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Merger, acquisition and divestiture expense $ 13 $ 5 $ 72 $ 27 Restructuring 4 3 10 8 Related-party royalty income — (9) (17) (22) Related-party R&D income — (3) (2) (9) Asset impairment — — — 5 Other income, net (2) (6) (3) (8) Other operating expense (income), net $ 15 $ (10) $ 60 $ 1 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Expenses | The Company’s restructuring expenses consist primarily of employee termination benefits (principally severance and/or other termination benefits) and other costs, which are primarily professional fees and costs related to equipment moves. Three months ended September 30, 2023 Nine months ended September 30, 2023 (in millions) Fuel Systems Aftermarket Total Fuel Systems Aftermarket Total Employee termination benefits $ 3 $ — $ 3 $ 7 $ 1 $ 8 Other 1 — 1 2 — 2 Total restructuring expense $ 4 $ — $ 4 $ 9 $ 1 $ 10 Three months ended September 30, 2022 Nine months ended September 30, 2022 (in millions) Fuel Systems Aftermarket Total Fuel Systems Aftermarket Total Employee termination benefits $ — $ — $ — $ 2 $ — $ 2 Other 3 — 3 6 — 6 Total restructuring expense $ 3 $ — $ 3 $ 8 $ — $ 8 |
Schedule of Restructuring Reserve Roll Forward | The following table displays a roll forward of the restructuring liability recorded within the Company’s Condensed Consolidated Balance Sheets and the related cash flow activity: (in millions) Employee termination benefits Other Total Balance at January 1, 2023 $ 20 $ — $ 20 Restructuring expense, net 8 2 10 Cash payments (17) (2) (19) Balance at September 30, 2023 11 — 11 Less: Non-current restructuring liability (1) — (1) Current restructuring liability at September 30, 2023 $ 10 $ — $ 10 (in millions) Employee termination benefits Other Total Balance at January 1, 2022 $ 60 $ — $ 60 Restructuring expense, net 2 6 8 Cash payments (36) (5) (41) Foreign currency translation adjustment and other (4) — (4) Balance at September 30, 2022 22 1 23 Less: Non-current restructuring liability (5) — (5) Current restructuring liability at September 30, 2022 $ 17 $ 1 $ 18 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | A summary of Inventories is presented below: (in millions) September 30, December 31, Raw material and supplies $ 313 $ 275 Work-in-progress 38 39 Finished goods 178 145 Inventories $ 529 $ 459 |
OTHER CURRENT AND NON-CURRENT_2
OTHER CURRENT AND NON-CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | (in millions) September 30, December 31, Prepayments and other current assets: Prepaid taxes $ 16 $ 11 Prepaid customer tooling 8 3 Customer return assets 7 6 Deposits 4 3 Prepaid insurance 4 — Prepaid engineering 3 3 Other 11 14 Total prepayments and other current assets $ 53 $ 40 Investments and long-term receivables: Long-term receivables $ 80 $ 279 Investment in equity affiliates 46 44 Investment in equity securities 4 2 Total investments and long-term receivables $ 130 $ 325 Other non-current assets: Deferred income taxes $ 58 $ 157 Operating leases 64 80 Other 29 25 Total other non-current assets $ 151 $ 262 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | A summary of the components in the carrying amount of goodwill as of September 30, 2023 and December 31, 2022 is as follows: (in millions) Fuel Systems Aftermarket Total Gross goodwill balance, December 31, 2022 $ 58 $ 545 $ 603 Accumulated impairment losses — (113) (113) Net goodwill balance, December 31, 2022 $ 58 $ 432 $ 490 Goodwill during the period: Translation adjustment — (4) (4) Net goodwill balance, September 30, 2023 $ 58 $ 428 $ 486 |
Schedule of Finite-Lived Intangible Assets | The Company’s other intangible assets consist of the following: September 30, 2023 December 31, 2022 (in millions) Estimated useful lives (years) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Amortized intangible assets: Patented and unpatented technology 14 - 15 $ 144 $ 39 $ 105 $ 144 $ 30 $ 114 Customer relationships 14 - 15 263 97 166 263 85 178 Total amortized intangible assets 407 136 271 407 115 292 Unamortized trade names 140 — 140 140 — 140 Total other intangible assets $ 547 $ 136 $ 411 $ 547 $ 115 $ 432 |
Schedule of Indefinite-Lived Intangible Assets | The Company’s other intangible assets consist of the following: September 30, 2023 December 31, 2022 (in millions) Estimated useful lives (years) Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount Amortized intangible assets: Patented and unpatented technology 14 - 15 $ 144 $ 39 $ 105 $ 144 $ 30 $ 114 Customer relationships 14 - 15 263 97 166 263 85 178 Total amortized intangible assets 407 136 271 407 115 292 Unamortized trade names 140 — 140 140 — 140 Total other intangible assets $ 547 $ 136 $ 411 $ 547 $ 115 $ 432 |
PRODUCT WARRANTY (Tables)
PRODUCT WARRANTY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Product Warranties Disclosures [Abstract] | |
Schedule of Product Warranty Liability | The following table summarizes the activity in the product warranty accrual accounts: (in millions) 2023 2022 Beginning balance, January 1 $ 60 $ 68 Adjustments of prior estimates 1 5 Provisions for current period sales 32 28 Payments (35) (35) Other, primarily translation adjustment (1) (4) Ending balance, September 30, $ 57 $ 62 The product warranty liability is classified in the Condensed Consolidated Balance Sheets as follows: (in millions) September 30, December 31, 2022 Other current liabilities $ 30 $ 32 Other non-current liabilities 27 28 Total product warranty liability $ 57 $ 60 |
NOTES PAYABLE AND DEBT (Tables)
NOTES PAYABLE AND DEBT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | As of September 30, 2023 and December 31, 2022, the Company had debt outstanding as follows: (in millions) September 30, December 31, 2022 Short-term borrowings $ 75 $ — Long-term debt 5.000% Senior notes due 10/01/25 ($800 million par value) $ 25 $ 26 $300 million Term Loan A Facility (net of $3 unamortized issuance costs) 297 — $425 million Term Loan B Facility (net of $6 unamortized issuance costs and $16 unamortized discount) 403 — Other long-term debt — 2 Total long-term debt $ 725 $ 28 Less: current portion 12 — Long-term debt, net of current portion $ 713 $ 28 |
OTHER CURRENT AND NON-CURRENT_3
OTHER CURRENT AND NON-CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Additional Details Related to Other Liabilities | Additional detail related to liabilities is presented in the table below: (in millions) September 30, December 31, Other current liabilities: Customer related $ 105 $ 96 Payroll and employee related 86 81 Income taxes payable 51 28 Product warranties (Note 10) 30 32 Accrued freight 19 13 Operating leases 17 18 Employee termination benefits (Note 5) 10 16 Deferred engineering 5 17 Other 94 183 Total other current liabilities $ 417 $ 484 Other non-current liabilities: Deferred income taxes $ 60 $ 46 Operating leases 51 67 Product warranties (Note 10) 27 28 Uncertain tax positions 14 37 Deferred income 6 — Due to former parent — 957 Other 13 19 Total other non-current liabilities $ 171 $ 1,154 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | The following tables classify assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022: Basis of fair value measurements (in millions) Balance at September 30, 2023 Quoted prices in active markets for identical items Significant other observable inputs Significant unobservable inputs Valuation Assets: Foreign currency contracts $ 1 $ — $ 1 $ — A Liabilities: Foreign currency contracts $ (1) $ — $ (1) $ — A Basis of fair value measurements (in millions) Balance at December 31, 2022 Quoted prices in active markets for identical items Significant other observable inputs Significant unobservable inputs Valuation Assets: Foreign currency contracts $ 7 $ — $ 7 $ — A Liabilities: Foreign currency contracts $ (1) $ — $ (1) $ — A |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position | September 30, 2023 and December 31, 2022, the following amounts were recorded in the Condensed Consolidated Balance Sheets as being payable to or receivable from counterparties under ASC Topic 815: (in millions) Assets Liabilities Derivatives designated as hedging instruments Under Topic 815: Balance Sheet Location September 30, 2023 December 31, 2022 Balance Sheet Location September 30, 2023 December 31, 2022 Foreign currency Prepayments and other current assets $ 1 $ 7 Other current liabilities $ 1 $ 1 |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The table below shows deferred gains (losses) reported in AOCI as well as the amount expected to be reclassified to income in one year or less for designated net investment hedges. The amount expected to be reclassified to income in one year or less assumes no change in the current relationship of the hedged item at September 30, 2023 market rates. (in millions) Deferred loss in AOCI at Gain (loss) expected to be reclassified to income in one year or less Contract Type September 30, 2023 December 31, 2022 Foreign currency $ (6) $ (4) $ — |
Schedule of Derivative Instruments | Derivative instruments designated as hedging instruments as defined by ASC Topic 815 held during the period resulted in the following gains and losses recorded in income: Three months ended September 30, 2023 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income (loss) Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded $ 896 $ 719 $ 104 $ (61) Gain (loss) on cash flow hedging relationships: Foreign currency Loss recognized in Other comprehensive income (loss) $ (1) Nine months ended September 30, 2023 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income (loss) Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded $ 2,618 $ 2,080 $ 306 $ (34) Gain (loss) on cash flow hedging relationships: Foreign currency Loss recognized in Other comprehensive income $ (3) Three months ended September 30, 2022 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income (loss) Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded $ 859 $ 658 $ 100 $ (104) Gain (loss) on cash flow hedging relationships: Foreign currency Gain recognized in Other comprehensive loss $ 1 Nine months ended September 30, 2022 (in millions) Net sales Cost of sales Selling, general and administrative expenses Other comprehensive income (loss) Total amounts of earnings and other comprehensive income line items in which the effects of cash flow hedges are recorded $ 2,497 $ 1,964 $ 301 $ (197) Gain (loss) on cash flow hedging relationships: Foreign currency Gain recognized in Other comprehensive income (loss) $ 2 |
Schedule of Derivatives Not Designated as Hedging Instruments | Derivatives not designated as hedging instruments are used to hedge remeasurement exposures of monetary assets and liabilities denominated in currencies other than the operating units' functional currency. These derivatives resulted in the following gains (losses) recorded in income: (in millions) Three months ended September 30, Nine months ended September 30, Contract Type Location 2023 2022 2023 2022 Foreign Currency Cost of sales $ — $ 3 $ 4 $ — |
RETIREMENT BENEFIT PLANS (Table
RETIREMENT BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of Net Benefit (Income) Costs | The components of net periodic benefit income recorded in the Condensed Consolidated Statements of Operations are as follows: Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Service cost $ 1 $ 1 $ 2 $ 1 Interest cost 11 6 32 18 Expected return on plan assets (11) (14) (32) (43) Amortization of unrecognized loss — — (1) — Net periodic benefit cost (income) $ 1 $ (7) $ 1 $ (24) |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stockholders Equity | The changes of the Stockholders’ Equity items during the three and nine months ended September 30, 2023 and 2022, are as follows: (in millions) Issued common stock Additional paid-in capital Treasury stock Retained deficit Former parent investment Accumulated other comprehensive loss Total equity Balance, June 30, 2023 $ — $ — $ — $ — $ 2,053 $ (61) $ 1,992 Net earnings — — — 11 — — 11 Dividends declared ($0.25 per share) — — — (12) — — (12) Purchase of treasury stock — — (9) — — — (9) Other comprehensive loss — — — — — (61) (61) Share-based compensation expense — 3 — — — — 3 Net transfers to former parent — — — — (32) — (32) Reclassification of former parent's net investment and issuance of ordinary shares in connection with Spin-Off 1 2,020 — — (2,021) — — Balance, September 30, 2023 $ 1 $ 2,023 $ (9) $ (1) $ — $ (122) $ 1,892 (in millions) Former parent investment Accumulated other comprehensive loss Noncontrolling interest Total equity Balance, June 30, 2022 $ 1,755 $ (31) $ — $ 1,724 Net earnings 89 — — 89 Other comprehensive loss — (104) — (104) Net transfers from former parent 43 — — 43 Balance, September 30, 2022 $ 1,887 $ (135) $ — $ 1,752 (in millions) Issued common stock Additional paid-in capital Treasury stock Retained deficit Former parent investment Accumulated other comprehensive loss Total equity Balance, December 31, 2022 $ — $ — $ — $ — $ 1,731 $ (88) $ 1,643 Net earnings — — — 11 70 — 81 Dividends declared ($0.25 per share) — — — (12) — — (12) Purchase of treasury stock — — (9) — — — (9) Other comprehensive loss — — — — — (34) (34) Share-based compensation expense — 3 — — — — 3 Net transfers from former parent — — — — 220 — 220 Reclassification of former parent's net investment and issuance of ordinary shares in connection with Spin-Off 1 2,020 — — (2,021) — — Balance, September 30, 2023 $ 1 $ 2,023 $ (9) $ (1) $ — $ (122) $ 1,892 (in millions) Former parent investment Accumulated other comprehensive loss Noncontrolling interest Total equity Balance, December 31, $ 1,647 $ 62 $ 3 $ 1,712 Net earnings 187 — 187 Other comprehensive loss — (197) — (197) Purchase of noncontrolling interest — — (3) (3) Net transfers from former parent 53 — — 53 Balance, September 30, 2022 $ 1,887 $ (135) $ — $ 1,752 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The following tables summarizes the activity within accumulated other comprehensive loss: (in millions) Foreign currency translation adjustments Defined benefit pension plans Hedge instruments Total Beginning balance, June 30, 2023 $ (55) $ (7) $ 1 $ (61) Comprehensive income (loss) (58) (3) (1) (62) Income taxes associated with comprehensive income — 1 — 1 Ending Balance, September 30, 2023 $ (113) $ (9) $ — $ (122) (in millions) Foreign currency translation adjustments Defined benefit pension plans Hedge instruments Total Beginning balance, June 30, 2022 $ (82) $ 52 $ (1) $ (31) Comprehensive income (loss) (99) (7) 1 (105) Income taxes associated with comprehensive income — 1 — 1 Ending Balance, September 30, 2022 $ (181) $ 46 $ — $ (135) (in millions) Foreign currency translation adjustments Defined benefit pension plans Hedge instruments Total Beginning Balance, December 31, 2022 $ (85) $ (6) $ 3 $ (88) Comprehensive income (loss) (28) (4) (3) (35) Income taxes associated with comprehensive income — 1 — 1 Ending Balance, September 30, 2023 $ (113) $ (9) $ — $ (122) (in millions) Foreign currency translation adjustments Defined benefit pension plans Hedge instruments Total Beginning Balance, December 31, 2021 $ 5 $ 59 $ (2) $ 62 Comprehensive income (loss) (186) (16) 2 (200) Income taxes associated with comprehensive income — 3 — 3 Ending Balance, September 30, 2022 $ (181) $ 46 $ — $ (135) |
RELATED-PARTY TRANSACTIONS (Tab
RELATED-PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Net transfers from (to) BorgWarner are included within Former parent investment in the Condensed Consolidated Statements of Changes in Equity. The components of the transfers from (to) BorgWarner are as follows: Nine months ended September 30, (in millions) 2023 2022 General financing activities $ (63) $ (22) Cash pooling and other equity settled balances with BorgWarner (64) (11) Related-party notes converted to equity 260 — Corporate allocations 89 95 Research and development income from BorgWarner (2) (9) Total net transfers from BorgWarner $ 220 $ 53 Exclude non-cash items: Stock-based compensation $ (4) $ (7) Other non-cash activities with BorgWarner, net (16) (32) Related-party notes converted to equity (260) — Cash pooling and intercompany financing activities with BorgWarner, net 55 (30) Total net transfers to BorgWarner per Condensed Consolidated Statements of Cash Flow $ (5) $ (16) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Reconciliation | The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock: Three months ended September 30, Nine months ended September 30, ( in millions, except per share amounts ) 2023 2022 2023 2022 Basic earnings per share: Net earnings $ 11 $ 89 $ 81 $ 187 Weighted average shares of common stock outstanding 47.0 47.0 47.0 47.0 Basic earnings per share of common stock $ 0.24 $ 1.89 $ 1.72 $ 3.98 Diluted earnings per share: Net earnings $ 11 $ 89 $ 81 $ 187 Weighted average shares of common stock outstanding 47.0 47.0 47.0 47.0 Effect of stock-based compensation 0.1 — — — Weighted average shares of common stock outstanding including dilutive shares 47.1 47.0 47.0 47.0 Diluted earnings per share of common stock $ 0.24 $ 1.89 $ 1.72 $ 3.98 |
REPORTABLE SEGMENTS AND RELAT_2
REPORTABLE SEGMENTS AND RELATED INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Net Sales and Total Assets by Reporting Segment | Net Sales by Reportable Segment Three months ended September 30, 2023 Nine months ended September 30, 2023 (in millions) Customers Inter-segment Net Customers Inter-segment Net Fuel Systems $ 561 $ 59 $ 620 $ 1,621 $ 173 $ 1,794 Aftermarket 335 (3) 332 997 4 1,001 Inter-segment eliminations — (56) (56) — (177) (177) Total $ 896 $ — $ 896 $ 2,618 $ — $ 2,618 Three months ended September 30, 2022 Nine months ended September 30, 2022 (in millions) Customers Inter-segment Net Customers Inter-segment Net Fuel Systems $ 534 $ 63 $ 597 $ 1,545 $ 162 $ 1,707 Aftermarket 325 2 327 952 6 958 Inter-segment eliminations — (65) (65) — (168) (168) Total $ 859 $ — $ 859 $ 2,497 $ — $ 2,497 |
Schedule of Segment Earnings Before Interest and Income Taxes | Segment Adjusted Operating Income Three months ended September 30, Nine months ended September 30, (in millions) 2023 2022 2023 2022 Fuel Systems $ 55 $ 84 $ 160 $ 193 Aftermarket 46 48 143 137 Segment AOI 101 132 303 330 Corporate, including stock-based compensation 19 17 45 61 Related-party royalty income — (9) (17) (22) Merger, acquisition and divestiture expense, net 13 5 72 27 Intangible asset amortization expense 7 7 21 21 Restructuring expense (Note 5) 4 3 10 8 Asset impairments and lease modifications — (2) — 4 Equity in affiliates' earnings, net of tax (2) (5) (8) (8) Interest expense 22 5 34 14 Interest income (4) (2) (9) (3) Other postretirement income — (8) (1) (25) Earnings before income taxes 42 121 156 253 Provision for income taxes 31 32 75 66 Net earnings $ 11 $ 89 $ 81 $ 187 |
INTRODUCTION AND TRANSITION T_2
INTRODUCTION AND TRANSITION TO STANDALONE COMPANY (Details) | Jun. 23, 2023 shares |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Stock conversion from Borgwarner to PHINIA (in shares) | 0.2 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Related Party Transaction [Line Items] | ||||
Selling, general and administrative expenses | $ 104 | $ 100 | $ 306 | $ 301 |
Corporate Expense Allocation | Related Party | ||||
Related Party Transaction [Line Items] | ||||
Selling, general and administrative expenses | $ 26 | $ 89 | $ 95 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Revenue from External Customer [Line Items] | ||
Contract with customer, contract assets, current | $ 2 | |
Contract with customer, contract asset | $ 2 | |
Liability, current | $ 3 | $ 3 |
Minimum | ||
Revenue from External Customer [Line Items] | ||
Revenue, remaining performance obligation, expected timing of satisfaction (in years) | 3 years | |
Maximum | ||
Revenue from External Customer [Line Items] | ||
Revenue, remaining performance obligation, expected timing of satisfaction (in years) | 7 years |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue from External Customer [Line Items] | ||||
Net sales | $ 896 | $ 859 | $ 2,618 | $ 2,497 |
Fuel Systems | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 561 | 534 | 1,621 | 1,545 |
Aftermarket | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 335 | 325 | 997 | 952 |
Americas | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 392 | 349 | 1,128 | 1,012 |
Americas | Fuel Systems | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 199 | 142 | 537 | 408 |
Americas | Aftermarket | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 193 | 207 | 591 | 604 |
Europe | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 354 | 317 | 1,061 | 987 |
Europe | Fuel Systems | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 232 | 216 | 711 | 686 |
Europe | Aftermarket | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 122 | 101 | 350 | 301 |
Asia | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 150 | 193 | 429 | 498 |
Asia | Fuel Systems | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | 130 | 176 | 373 | 451 |
Asia | Aftermarket | ||||
Revenue from External Customer [Line Items] | ||||
Net sales | $ 20 | $ 17 | $ 56 | $ 47 |
RESEARCH AND DEVELOPMENT COST_2
RESEARCH AND DEVELOPMENT COSTS - Schedule of Research and Development Arrangement, Contract to Perform for Others (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Research and Development [Abstract] | ||||
Gross R&D expenditures | $ 45 | $ 49 | $ 143 | $ 151 |
Customer reimbursements | (21) | (25) | (62) | (73) |
Net R&D expenditures | $ 24 | $ 24 | $ 81 | $ 78 |
OTHER OPERATING EXPENSE (INCO_3
OTHER OPERATING EXPENSE (INCOME), NET - Schedule of Other Operating Expense (Income), Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Related Party Transaction [Line Items] | ||||
Merger, acquisition and divestiture expense | $ 13 | $ 5 | $ 72 | $ 27 |
Restructuring | 4 | 3 | 10 | 8 |
Related-party R&D income | (21) | (25) | (62) | (73) |
Asset impairments | 0 | 0 | 0 | 5 |
Other income, net | (2) | (6) | (3) | (8) |
Other operating expense (income), net | 15 | (10) | 60 | 1 |
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Related-party royalty income | 0 | (9) | (17) | (22) |
Related-party R&D income | $ 0 | $ (3) | $ (2) | $ (9) |
RESTRUCTURING - Schedule of Res
RESTRUCTURING - Schedule of Restructuring Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring expense | $ 4 | $ 3 | $ 10 | $ 8 |
Fuel Systems | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring expense | 4 | 3 | 9 | 8 |
Aftermarket | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring expense | 0 | 0 | 1 | 0 |
Employee termination benefits | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring expense | 3 | 0 | 8 | 2 |
Employee termination benefits | Fuel Systems | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring expense | 3 | 0 | 7 | 2 |
Employee termination benefits | Aftermarket | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring expense | 0 | 0 | 1 | 0 |
Other | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring expense | 1 | 3 | 2 | 6 |
Other | Fuel Systems | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring expense | 1 | 3 | 2 | 6 |
Other | Aftermarket | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Total restructuring expense | $ 0 | $ 0 | $ 0 | $ 0 |
RESTRUCTURING - Schedule of R_2
RESTRUCTURING - Schedule of Restructuring Reserve Roll Forward (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | $ 20 | $ 60 | ||
Restructuring expense, net | $ 4 | $ 3 | 10 | 8 |
Cash payments | (19) | (41) | ||
Foreign currency translation adjustment and other | (4) | |||
Restructuring reserve, ending balance | 11 | 23 | 11 | 23 |
Less: Non-current restructuring liability | (1) | (5) | (1) | (5) |
Restructuring reserve, current, ending balance | 10 | 18 | 10 | 18 |
Employee termination benefits | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 20 | 60 | ||
Restructuring expense, net | 8 | 2 | ||
Cash payments | (17) | (36) | ||
Foreign currency translation adjustment and other | (4) | |||
Restructuring reserve, ending balance | 11 | 22 | 11 | 22 |
Less: Non-current restructuring liability | (1) | (5) | (1) | (5) |
Restructuring reserve, current, ending balance | 10 | 17 | 10 | 17 |
Other | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring reserve, beginning balance | 0 | 0 | ||
Restructuring expense, net | 2 | 6 | ||
Cash payments | (2) | (5) | ||
Foreign currency translation adjustment and other | 0 | |||
Restructuring reserve, ending balance | 0 | 1 | 0 | 1 |
Less: Non-current restructuring liability | 0 | 0 | 0 | 0 |
Restructuring reserve, current, ending balance | $ 0 | $ 1 | $ 0 | $ 1 |
RESTRUCTURING - Narratives (Det
RESTRUCTURING - Narratives (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net | $ 4 | $ 3 | $ 10 | $ 8 |
Fuel Systems | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net | $ 4 | $ 3 | $ 9 | 8 |
Fuel Systems | Delphi Technologies Restructuring | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expense, net | $ 8 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate reconciliation (in percent) | 74% | 26% | 48% | 26% |
INVENTORIES - Schedule of Inven
INVENTORIES - Schedule of Inventory (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw material and supplies | $ 313 | $ 275 |
Work-in-progress | 38 | 39 |
Finished goods | 178 | 145 |
Inventories | $ 529 | $ 459 |
OTHER CURRENT AND NON-CURRENT_4
OTHER CURRENT AND NON-CURRENT ASSETS - Schedule of Other Assets (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Prepayments and other current assets: | ||
Prepaid taxes | $ 16 | $ 11 |
Prepaid customer tooling | 8 | 3 |
Customer return assets | 7 | 6 |
Deposits | 4 | 3 |
Prepaid insurance | 4 | 0 |
Prepaid engineering | 3 | 3 |
Other | 11 | 14 |
Prepayments and other current assets | 53 | 40 |
Investments and long-term receivables: | ||
Long-term receivables | 80 | 279 |
Investment in equity affiliates | 46 | 44 |
Investment in equity securities | 4 | 2 |
Investments and long-term receivables | 130 | 325 |
Other non-current assets: | ||
Deferred income taxes | 58 | 157 |
Operating leases | 64 | 80 |
Other | 29 | 25 |
Total other non-current assets | $ 151 | $ 262 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLES - Schedule of Goodwill (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Goodwill [Line Items] | ||
Gross goodwill balance | $ 603 | |
Accumulated impairment losses | (113) | |
Net goodwill balance | $ 486 | 490 |
Goodwill [Roll Forward] | ||
Net goodwill balance, December 31, 2022 | 490 | |
Translation adjustment | (4) | |
Net goodwill balance, September 30, 2023 | 486 | |
Fuel Systems | ||
Goodwill [Line Items] | ||
Gross goodwill balance | 58 | |
Accumulated impairment losses | 0 | |
Net goodwill balance | 58 | 58 |
Goodwill [Roll Forward] | ||
Net goodwill balance, December 31, 2022 | 58 | |
Translation adjustment | 0 | |
Net goodwill balance, September 30, 2023 | 58 | |
Aftermarket | ||
Goodwill [Line Items] | ||
Gross goodwill balance | 545 | |
Accumulated impairment losses | (113) | |
Net goodwill balance | 428 | $ 432 |
Goodwill [Roll Forward] | ||
Net goodwill balance, December 31, 2022 | 432 | |
Translation adjustment | (4) | |
Net goodwill balance, September 30, 2023 | $ 428 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLES - Schedule of Other Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortized intangible assets, gross carrying amount | $ 407 | $ 407 |
Amortized intangible assets, accumulated amortization | 136 | 115 |
Amortized intangible assets, net carrying amount | 271 | 292 |
Unamortized trade names | 140 | 140 |
Intangible assets, gross (excluding goodwill) | 547 | 547 |
Other intangible assets, net | 411 | 432 |
Patented and unpatented technology | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortized intangible assets, gross carrying amount | 144 | 144 |
Amortized intangible assets, accumulated amortization | 39 | 30 |
Amortized intangible assets, net carrying amount | 105 | 114 |
Customer Relationships | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortized intangible assets, gross carrying amount | 263 | 263 |
Amortized intangible assets, accumulated amortization | 97 | 85 |
Amortized intangible assets, net carrying amount | $ 166 | $ 178 |
Minimum | Patented and unpatented technology | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 14 years | |
Minimum | Customer Relationships | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 14 years | |
Maximum | Patented and unpatented technology | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 15 years | |
Maximum | Customer Relationships | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Estimated useful lives (years) | 15 years |
PRODUCT WARRANTY - Narrative (D
PRODUCT WARRANTY - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Minimum | |
Guarantor Obligations [Line Items] | |
Standard product warranty term (in years) | 1 year |
Maximum | |
Guarantor Obligations [Line Items] | |
Standard product warranty term (in years) | 3 years |
PRODUCT WARRANTY - Schedule of
PRODUCT WARRANTY - Schedule of Product Warranty Liability (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | |||
Beginning balance, January 1 | $ 60 | $ 68 | |
Adjustments of prior estimates | 1 | 5 | |
Provisions for current period sales | 32 | 28 | |
Payments | (35) | (35) | |
Other, primarily translation adjustment | (1) | (4) | |
Ending balance, September 30, | 57 | 62 | |
Other current liabilities | 30 | $ 32 | |
Other non-current liabilities | 27 | 28 | |
Total product warranty liability | $ 57 | $ 62 | $ 60 |
NOTES PAYABLE AND DEBT - Schedu
NOTES PAYABLE AND DEBT - Schedule of Long-term Debt Instruments (Details) - USD ($) | Sep. 30, 2023 | Jul. 03, 2023 | Dec. 31, 2022 |
Short-term borrowings | |||
Short-term borrowings | $ 75,000,000 | $ 0 | |
Long-term debt | |||
Long-term debt | 713,000,000 | 28,000,000 | |
Nonrelated Party | |||
Long-term debt | |||
Long-term debt | 725,000,000 | 28,000,000 | |
Less: current portion | 12,000,000 | 0 | |
Long-term debt, net of current portion | $ 713,000,000 | 28,000,000 | |
5.000% Senior notes due 10/01/25 ($800 million par value) | Senior Notes | |||
Long-term debt | |||
Debt instrument stated interest rate | 5% | ||
Debt instrument face value | $ 800,000,000 | ||
5.000% Senior notes due 10/01/25 ($800 million par value) | Senior Notes | Nonrelated Party | |||
Long-term debt | |||
Long-term debt | 25,000,000 | 26,000,000 | |
Senior Unsecured Term Loan A Facility | Line of Credit | |||
Long-term debt | |||
Debt instrument face value | $ 300,000,000 | ||
Long-term debt, gross | 300,000,000 | ||
Unamortized issuance costs | 3,000,000 | ||
Long-term debt | 297,000,000 | 0 | |
Senior Unsecured Term Loan B Facility | Line of Credit | |||
Long-term debt | |||
Debt instrument face value | $ 425,000,000 | ||
Long-term debt, gross | 425,000,000 | ||
Unamortized issuance costs | 6,000,000 | ||
Unamortized discount | 16,000,000 | ||
Long-term debt | 403,000,000 | 0 | |
Other long-term debt | Other Long-Term Debt | Nonrelated Party | |||
Long-term debt | |||
Long-term debt | $ 0 | $ 2,000,000 |
NOTES PAYABLE AND DEBT - Narrat
NOTES PAYABLE AND DEBT - Narrative (Details) | Jul. 03, 2023 USD ($) period | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Line of Credit Facility [Line Items] | |||
Short-term borrowings | $ 75,000,000 | $ 0 | |
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Short-term borrowings | 75,000,000 | ||
Senior Notes Due October 2025 | Senior Notes | |||
Line of Credit Facility [Line Items] | |||
Debt instrument face value | $ 800,000,000 | ||
Debt instrument stated interest rate | 5% | ||
Senior Notes Due October 2025 | Estimate of Fair Value Measurement | Senior Notes | |||
Line of Credit Facility [Line Items] | |||
Estimated fair value of senior unsecured notes | $ 753,000,000 | 23,000,000 | |
Debt, difference between fair value and carrying value | $ (28,000,000) | $ 3,000,000 | |
Credit Agreement | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility | $ 1,225,000,000 | ||
Credit Agreement | Fed Funds Effective Rate | |||
Line of Credit Facility [Line Items] | |||
Interest, basis spread on variable rate (percent) | 0.50% | ||
Credit Agreement | SOFR | |||
Line of Credit Facility [Line Items] | |||
Interest, basis spread on variable rate (percent) | 1% | ||
Credit spread adjustment (percent) | 0.10% | ||
Credit Agreement | Revolving Credit Facility | Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility | $ 500,000,000 | ||
Senior Unsecured Term Loan A Facility | SOFR | |||
Line of Credit Facility [Line Items] | |||
Credit spread adjustment (percent) | 1% | ||
Senior Unsecured Term Loan A Facility | SOFR | Minimum | |||
Line of Credit Facility [Line Items] | |||
Interest, basis spread on variable rate (percent) | 1.50% | ||
Senior Unsecured Term Loan A Facility | SOFR | Maximum | |||
Line of Credit Facility [Line Items] | |||
Interest, basis spread on variable rate (percent) | 2% | ||
Senior Unsecured Term Loan A Facility | Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Debt instrument face value | $ 300,000,000 | ||
Senior Unsecured Term Loan B Facility | SOFR | |||
Line of Credit Facility [Line Items] | |||
Debt instrument stated interest rate | 3% | ||
Senior Unsecured Term Loan B Facility | SOFR | Maximum | |||
Line of Credit Facility [Line Items] | |||
Debt instrument stated interest rate | 4% | ||
Senior Unsecured Term Loan B Facility | SONIA | |||
Line of Credit Facility [Line Items] | |||
Debt instrument stated interest rate | 0.0326% | ||
Senior Unsecured Term Loan B Facility | Line of Credit | |||
Line of Credit Facility [Line Items] | |||
Debt instrument face value | $ 425,000,000 | ||
Refinancing or replacement, threshold amount | $ 100,000,000 | ||
Revolving Credit Facility and Senior Unsecured Term A Facility | |||
Line of Credit Facility [Line Items] | |||
Leverage ratio, maximum | 3 | ||
Leverage ratio with elections for election period next succeeding testing period | 3.50 | ||
Leverage ratio with elections next two succeeding testing periods after election period | 3.25 | ||
Number of succeeding testing periods | period | 2 | ||
Interest coverage ratio, minimum | 3 | ||
Revolving Credit Facility and Senior Unsecured Term A Facility | SOFR, EURIBOR and SONIA | Minimum | |||
Line of Credit Facility [Line Items] | |||
Interest, basis spread on variable rate (percent) | 2.50% | ||
Revolving Credit Facility and Senior Unsecured Term A Facility | SOFR, EURIBOR and SONIA | Maximum | |||
Line of Credit Facility [Line Items] | |||
Interest, basis spread on variable rate (percent) | 3% |
OTHER CURRENT AND NON-CURRENT_5
OTHER CURRENT AND NON-CURRENT LIABILITIES - Schedule of Additional Details Related to Other Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Other current liabilities: | ||
Customer related | $ 105 | $ 96 |
Payroll and employee related | 86 | 81 |
Income taxes payable | 51 | 28 |
Product warranties (Note 10) | 30 | 32 |
Accrued freight | 19 | 13 |
Operating leases | 17 | 18 |
Employee termination benefits (Note 5) | 10 | 16 |
Deferred engineering | 5 | 17 |
Other | 94 | 183 |
Total other current liabilities | 417 | 484 |
Other non-current liabilities: | ||
Deferred income taxes | 60 | 46 |
Operating leases | 51 | 67 |
Product warranties (Note 10) | 27 | 28 |
Uncertain tax positions | 14 | 37 |
Deferred income | 6 | 0 |
Due to former parent | 0 | 957 |
Other | 13 | 19 |
Total other non-current liabilities | $ 171 | $ 1,154 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Assets and Liabilities Measured at Fair Value (Details) - Fair Value, Recurring - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Foreign currency contracts | $ 1 | $ 7 |
Liabilities: | ||
Foreign currency contracts | (1) | (1) |
Fair Value, Inputs, Level 1 | ||
Assets: | ||
Foreign currency contracts | 0 | 0 |
Liabilities: | ||
Foreign currency contracts | 0 | 0 |
Fair Value, Inputs, Level 2 | ||
Assets: | ||
Foreign currency contracts | 1 | 7 |
Liabilities: | ||
Foreign currency contracts | (1) | (1) |
Fair Value, Inputs, Level 3 | ||
Assets: | ||
Foreign currency contracts | 0 | 0 |
Liabilities: | ||
Foreign currency contracts | $ 0 | $ 0 |
FINANCIAL INSTRUMENTS - Narrati
FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Foreign currency | Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, notional amount | $ 38 | $ 309 |
FINANCIAL INSTRUMENTS - Schedul
FINANCIAL INSTRUMENTS - Schedule of Derivative Instruments in Statement of Financial Position (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative assets | $ 1 | $ 7 |
Derivative liabilities | $ 1 | $ 1 |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Prepayments and other current assets | Prepayments and other current assets |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Other current liabilities | Other current liabilities |
FINANCIAL INSTRUMENTS - Sched_2
FINANCIAL INSTRUMENTS - Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) (Details) - Foreign currency - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Derivatives, Fair Value [Line Items] | ||
Gain (loss) expected to be reclassified to income in one year or less | $ 0 | |
Deferred loss in AOCI at | ||
Derivatives, Fair Value [Line Items] | ||
Equity | $ (6) | $ (4) |
FINANCIAL INSTRUMENTS - Sched_3
FINANCIAL INSTRUMENTS - Schedule of Derivative Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivatives, Fair Value [Line Items] | ||||
Net sales | $ 896 | $ 859 | $ 2,618 | $ 2,497 |
Cost of sales | 719 | 658 | 2,080 | 1,964 |
Selling, general and administrative expenses | 104 | 100 | 306 | 301 |
Other comprehensive income (loss) | (61) | (104) | (34) | (197) |
Gain (loss) on cash flow hedging relationships: | ||||
Gain (loss) recognized in Other comprehensive income (loss) | $ (1) | $ (3) | ||
Cash Flow Hedging | ||||
Derivatives, Fair Value [Line Items] | ||||
Net sales | 859 | 2,497 | ||
Cost of sales | 658 | 1,964 | ||
Selling, general and administrative expenses | 100 | 301 | ||
Other comprehensive income (loss) | (197) | |||
Gain (loss) on cash flow hedging relationships: | ||||
Gain (loss) recognized in Other comprehensive income (loss) | $ 1 | $ 2 |
FINANCIAL INSTRUMENTS - Sched_4
FINANCIAL INSTRUMENTS - Schedule of Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Gain (loss) on derivatives not designated as hedges | $ 0 | $ 3 | $ 4 | $ 0 |
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Cost of sales | Cost of sales | Cost of sales | Cost of sales |
RETIREMENT BENEFIT PLANS - Narr
RETIREMENT BENEFIT PLANS - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |
Actual contribution to defined benefit pension plans | $ 2 |
Maximum | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, expected future employer contributions, current fiscal year | $ 3 |
RETIREMENT BENEFIT PLANS - Sche
RETIREMENT BENEFIT PLANS - Schedule of Net Benefit (Income) Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Retirement Benefits [Abstract] | ||||
Service cost | $ 1 | $ 1 | $ 2 | $ 1 |
Interest cost | 11 | 6 | 32 | 18 |
Expected return on plan assets | (11) | (14) | (32) | (43) |
Amortization of unrecognized loss | 0 | 0 | (1) | 0 |
Net periodic benefit cost (income) | $ 1 | $ (7) | $ 1 | $ (24) |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of Stockholders Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 1,992 | $ 1,724 | $ 1,643 | $ 1,712 |
Net earnings | 11 | 89 | 81 | 187 |
Dividends declared | (12) | (12) | ||
Purchase of treasury stock | (9) | (9) | ||
Other comprehensive income (loss) | (61) | (104) | (34) | (197) |
Share-based compensation expense | 3 | 3 | ||
Net transfers to former parent | (32) | |||
Net transfers from former parent | 43 | 220 | 53 | |
Reclassification of former parent's net investment and issuance of ordinary shares in connection with Spin-Off | 0 | 0 | ||
Purchase of noncontrolling interest | (3) | |||
Ending balance | 1,892 | 1,752 | 1,892 | 1,752 |
Issued common stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 0 | 0 | ||
Reclassification of former parent's net investment and issuance of ordinary shares in connection with Spin-Off | 1 | 1 | ||
Ending balance | 1 | 1 | ||
Additional paid-in capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 0 | 0 | ||
Share-based compensation expense | 3 | 3 | ||
Reclassification of former parent's net investment and issuance of ordinary shares in connection with Spin-Off | 2,020 | 2,020 | ||
Ending balance | 2,023 | 2,023 | ||
Treasury stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 0 | 0 | ||
Purchase of treasury stock | (9) | (9) | ||
Ending balance | (9) | (9) | ||
Retained deficit | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 0 | 0 | ||
Net earnings | 11 | 11 | ||
Dividends declared | (12) | (12) | ||
Ending balance | (1) | (1) | ||
Former parent investment | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 2,053 | 1,755 | 1,731 | 1,647 |
Net earnings | 89 | 70 | 187 | |
Net transfers to former parent | (32) | |||
Net transfers from former parent | 43 | 220 | 53 | |
Reclassification of former parent's net investment and issuance of ordinary shares in connection with Spin-Off | (2,021) | (2,021) | ||
Ending balance | 0 | 1,887 | 0 | 1,887 |
Accumulated other comprehensive loss | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (61) | (31) | (88) | 62 |
Other comprehensive income (loss) | (61) | (104) | (34) | (197) |
Ending balance | $ (122) | (135) | $ (122) | (135) |
Noncontrolling interest | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 3 | |||
Purchase of noncontrolling interest | (3) | |||
Ending balance | $ 0 | $ 0 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE LOSS - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | $ 1,992 | $ 1,724 | $ 1,643 | $ 1,712 | ||
Comprehensive income (loss) | (62) | (105) | (35) | (200) | ||
Income taxes associated with comprehensive income | 1 | 1 | 1 | 3 | ||
Ending balance | 1,892 | 1,752 | 1,892 | 1,752 | ||
Accumulated other comprehensive loss | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | (61) | (31) | (88) | 62 | ||
Ending balance | (122) | (135) | (122) | (135) | ||
Foreign currency translation adjustments | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | (55) | (82) | (85) | 5 | ||
Comprehensive income (loss) | (58) | (99) | (28) | [1] | (186) | [1] |
Income taxes associated with comprehensive income | 0 | 0 | 0 | 0 | ||
Ending balance | (113) | (181) | (113) | (181) | ||
Defined benefit pension plans | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | (7) | 52 | (6) | 59 | ||
Comprehensive income (loss) | (3) | (7) | (4) | (16) | ||
Income taxes associated with comprehensive income | 1 | 1 | 1 | 3 | ||
Ending balance | (9) | 46 | (9) | 46 | ||
Hedge instruments | ||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||
Beginning balance | 1 | (1) | 3 | (2) | ||
Comprehensive income (loss) | (1) | 1 | (3) | [1] | 2 | [1] |
Income taxes associated with comprehensive income | 0 | 0 | 0 | 0 | ||
Ending balance | $ 0 | $ 0 | $ 0 | $ 0 | ||
[1]Net of income taxes. |
RELATED-PARTY TRANSACTIONS - Al
RELATED-PARTY TRANSACTIONS - Allocation of General Corporate and Other Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Related Party Transaction [Line Items] | ||||
Selling, general and administrative expenses | $ 104 | $ 100 | $ 306 | $ 301 |
Corporate Expense Allocation | Related Party | ||||
Related Party Transaction [Line Items] | ||||
Selling, general and administrative expenses | $ 26 | $ 89 | $ 95 |
RELATED-PARTY TRANSACTIONS - Du
RELATED-PARTY TRANSACTIONS - Due From BongWarner Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Related Party Transaction [Line Items] | ||
Receivables, net | $ 1,175 | $ 891 |
Related Party | ||
Related Party Transaction [Line Items] | ||
Receivables, net | 142 | |
Due from BorgWarner, non-current | $ 208 |
RELATED-PARTY TRANSACTIONS - _2
RELATED-PARTY TRANSACTIONS - Due to BongWarner Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Related Party Transaction [Line Items] | ||
Other current liabilities | $ 417 | $ 484 |
Long-term debt | $ 713 | 28 |
Related Party | ||
Related Party Transaction [Line Items] | ||
Accounts payable | 186 | |
Other current liabilities | 99 | |
Long-term debt | $ 957 |
RELATED-PARTY TRANSACTIONS - Sc
RELATED-PARTY TRANSACTIONS - Schedule of Transfers (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Related Party Transaction [Line Items] | |||
Net transfers from former parent | $ 43 | $ 220 | $ 53 |
Total net transfers to BorgWarner per Condensed Consolidated Statements of Cash Flow | (5) | (16) | |
Related Party | General financing activities | |||
Related Party Transaction [Line Items] | |||
Net transfers from former parent | (63) | (22) | |
Related Party | Cash pooling and other equity settled balances with BorgWarner | |||
Related Party Transaction [Line Items] | |||
Net transfers from former parent | (64) | (11) | |
Related Party | Related-party notes converted to equity | |||
Related Party Transaction [Line Items] | |||
Net transfers from former parent | 260 | 0 | |
Total net transfers to BorgWarner per Condensed Consolidated Statements of Cash Flow | (260) | 0 | |
Related Party | Corporate allocations | |||
Related Party Transaction [Line Items] | |||
Net transfers from former parent | 89 | 95 | |
Related Party | Research and development income from BorgWarner | |||
Related Party Transaction [Line Items] | |||
Net transfers from former parent | (2) | (9) | |
Related Party | Stock-based compensation | |||
Related Party Transaction [Line Items] | |||
Total net transfers to BorgWarner per Condensed Consolidated Statements of Cash Flow | (4) | (7) | |
Related Party | Other non-cash activities with BorgWarner, net | |||
Related Party Transaction [Line Items] | |||
Total net transfers to BorgWarner per Condensed Consolidated Statements of Cash Flow | (16) | (32) | |
Related Party | Cash pooling and intercompany financing activities with BorgWarner, net | |||
Related Party Transaction [Line Items] | |||
Total net transfers to BorgWarner per Condensed Consolidated Statements of Cash Flow | $ 55 | $ (30) |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) shares in Millions | Jul. 02, 2023 shares |
Earnings Per Share [Abstract] | |
Antidilutive securities excluded from computation of earnings per share (in shares) | 47 |
EARNINGS PER SHARE - Schedule o
EARNINGS PER SHARE - Schedule of Earnings Per Share Reconciliation (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Net earnings | $ 11 | $ 89 | $ 81 | $ 187 |
Weighted average shares of common stock outstanding (in shares) | 47 | 47 | 47 | 47 |
Basic earnings per share of common stock (in dollar per share) | $ 0.24 | $ 1.89 | $ 1.72 | $ 3.98 |
Effect of stock-based compensation (in shares) | 0.1 | 0 | 0 | 0 |
Weighted average shares of common stock outstanding including dilutive shares (in shares) | 47.1 | 47 | 47 | 47 |
Diluted earnings per share of common stock (in dollars per share) | $ 0.24 | $ 1.89 | $ 1.72 | $ 3.98 |
REPORTABLE SEGMENTS AND RELAT_3
REPORTABLE SEGMENTS AND RELATED INFORMATION - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
REPORTABLE SEGMENTS AND RELAT_4
REPORTABLE SEGMENTS AND RELATED INFORMATION - Schedule of Net Sales and Total Assets by Reporting Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 896 | $ 859 | $ 2,618 | $ 2,497 |
Inter-segment eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (56) | (65) | (177) | (168) |
Fuel Systems | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 561 | 534 | 1,621 | 1,545 |
Fuel Systems | Inter-segment eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 59 | 63 | 173 | 162 |
Fuel Systems | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 620 | 597 | 1,794 | 1,707 |
Aftermarket | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 335 | 325 | 997 | 952 |
Aftermarket | Inter-segment eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (3) | 2 | 4 | 6 |
Aftermarket | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 332 | $ 327 | $ 1,001 | $ 958 |
REPORTABLE SEGMENTS AND RELAT_5
REPORTABLE SEGMENTS AND RELATED INFORMATION - Schedule of Segment Earnings Before Interest and Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Segment AOI | $ 58 | $ 111 | $ 172 | $ 231 |
Corporate, including stock-based compensation | 19 | 17 | 45 | 61 |
Merger, acquisition and divestiture expense, net | 13 | 5 | 72 | 27 |
Intangible asset amortization expense | 7 | 7 | 21 | 21 |
Restructuring expense, net | 4 | 3 | 10 | 8 |
Asset impairments and lease modifications | 0 | (2) | 0 | 4 |
Equity in affiliates' earnings, net of tax | 2 | 5 | 8 | 8 |
Interest expense | 22 | 5 | 34 | 14 |
Interest income | (4) | (2) | (9) | (3) |
Other postretirement income | 0 | (8) | (1) | (25) |
Earnings before income taxes | 42 | 121 | 156 | 253 |
Provision for income taxes | 31 | 32 | 75 | 66 |
Net earnings | 11 | 89 | 81 | 187 |
Affiliated Entity | ||||
Segment Reporting Information [Line Items] | ||||
Related-party royalty income | 0 | (9) | (17) | (22) |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment AOI | 101 | 132 | 303 | 330 |
Fuel Systems | ||||
Segment Reporting Information [Line Items] | ||||
Restructuring expense, net | 4 | 3 | 9 | 8 |
Fuel Systems | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment AOI | 55 | 84 | 160 | 193 |
Aftermarket | ||||
Segment Reporting Information [Line Items] | ||||
Restructuring expense, net | 0 | 0 | 1 | 0 |
Aftermarket | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment AOI | $ 46 | $ 48 | $ 143 | $ 137 |