PHIN - Earnings call transcript Q1 2024

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Operator

Thank you for standing by, and welcome to the Phinia Q1 2024 Earnings Call. [Operator Instructions] Finally, a reminder that this conference is also being recorded.

I would now like to turn the conference over to Gordon Meyer, Vice President and Treasurer. Please go ahead.

Unknown Attendee

Thank you, Paul, and good morning, everyone. us. joining you appreciate We

also Our conference available slide morning are remarks. issued that via materials Phinia's Investor were We're our on in a be this this Relations call we'll webcast. and referencing call broadcasting website, deck including

today CEO; and are CFO. Chris Ericson, Brady us Gropp, Joining

variety During due differ subject factors are and to of on this uncertainties. make to materially current in management's Actual filings. which we statements, will may from risks statements these expectations a call, results described SEC those forward-looking based and including are our

the that, over with it's And my pleasure Brady. to turn call to

Brady Ericson

Thank joining for you, this you Gordon. Thank morning. all

Our focused most continuing long-term in value team industry delivered remain on and consistently At strategies creation for delivering conditions challenging to in drive our to markets. on same resiliency continued our while demonstrated to stakeholders. time, value-added we our customers the We another strong the of quarter. solutions of face execute our

comments questions. our quarter open review I'll start in the additional on financial first will with for performance. call then before up her we detail provide overall some Chris

settlement Starting of commercial on favorable when partially over lower by related Adjusted operations. Slide supplier came some to to vehicle quarter good driven compared just in was year XXXX. QX This X% by segment customer EBITDA our pricing and million, onetime prior Europe. Adjusted an and much items, sales margins in in were to stronger due execution by the $XXX X. currency, and increase offset sales

margins basis million prior Total prior point improvement XXX of EBITDA EBITDA a adjusted segment were XXX margin year. basis a year. $XXX the of point adjusted over an XX.X%, over reported We adjusted operating and improvement XX.X%,

ago us some inflationary also we to QX about new year this was by quarter. XXXX quarter. during just for of XXX an helped mentioned be recovery rate, as had easier our love onetime limited points basis the items I'd in I the the run normal Although comparison

We former to on that the transition Agreements all Agreements progress our on continue track all Manufacturing to this exit Transition and from by of believe Service and Contract are CMAs TSAs or parent material make the end good summer. we or

sheet balance leverage Xx cash, ample liquidity. below and EBITDA million $XXX net strong of Our with remains

Our returned value the million quarter, shareholders continued as shareholder focus million in to on from $XX we up in QX. $XX

flexibility outstanding transaction can Our April, community run more the to as by balance to company the solid rate upsized as this which by million our our capital at our with investment investor the interest B early offering, XXXX opportunistically restrictive The costs, B $XXX we financial covenants strong will and the also point note as growth Loan demand the is in being continue provides position our we loan well shareholders. which senior Not reduce us ] from revolver. to the support closed significantly but eliminated recognized rates, [ secured repaid for Term which only million. return $XXX interest of evidenced we future and on under term of

service and alternative These ECU. off-highway products our the commercial with several business be all systems, include in and new great reflected for and strong lines Providing products I regions. across include and all X. continues Slide product to customers, in vehicle customers which for complete move Let's to wins fuels

platforms in conquest one plans support in supply America. in its global to specific OEM GDi diesel fuel system OEM to of America, South business supply for localization systems a GDi extension injectors vehicle and uplift of to examples for vehicle a leading in Europe. contract Some uplift with commercial Contract their leading leading fuel OEM are to a light a North extension and volume

particularly was QX, portion large our we well Importantly, for continues wins Conquest about of new to a wins, and share be which market our continued during gains. think strong our bodes business as recent

we us of for In lot XXXX exciting have an product new be year will launches, terms going a on. as

first, me bar announce. Let system global Changan Phinia's GDi provide our will discuss that we're Highwood to auto fuel that XXX high-performance in a recent launch proud a to vehicle In for product a QX. launches

systems and been that advanced in for XXX quality, system be numerous customer the I'm responsiveness, emissions, can customer receiving first fuel pleased lower reduce recognition This particulate significantly costs. launching the of the Also This on years. coming the to Phinia several share consumption has vehicle overall lower support. is we'll improvement awards front, bar that and

XXXX. when by supporting year This Hyundai of award plans. Hyundai's as For Phinia's supplier in recently agility example, granted of production was was the recognition Phinia recognized adaptability and

beyond More production was well specifically, Phinia supply hybrid meet ability to contracted increase to growing its quickly demands. capacity recognized for

quarter results business another successfully towards Our this as step independent represent executing important an our strategy entity.

and on ahead, will Looking of we growth. strategic continue path fiscal our responsibility

strengthen clear: goals deliver ambitious Our opportunities, all we've done We that the help achieve believe to shareholders, us invest To are in our growth position. our market achievable goals. our will value and to innovation strongly and yet work to

and track year QX XXXX that we guidance at our our line expectations, issued last with looking with performed and full Overall, results, in business quarter. financial our we're on

performance. we As a be result, another deliver able year will we of financial to believe strong

year. us and Chris, With Chris? walk to discuss the to that, hand our like I'd outlook our for who will through results it QX over

Chris Gropp

Thanks, for this all thank you us morning. joining Brady, for and

a be outlook. out. rapidly parent, are As discuss with we reminder, former we mind CMAs Please our our keep TSAs there and phasing which to will continue and in results

reconciliations financial release. of non-GAAP can addition, all that today's press I measures in will discuss In be found

deck. the sales, versus slightly total generated Moving ago. up to Page adjusted we year a in $XXX in In QX, million X

of pass-through. pricing CV higher Fuel lower FX by X.X%, whereas impacted and was from inflationary by benefited business Systems for in aftermarket offset an positive Europe, Our revenue increase price

earned adjusted increase XXX margin while represented earnings basis basis of and income of an resulting represents million Our $X.XX. million a the which adjusted a adjusted year-over-year of of points. year-over-year increase diluted share margin of XXX in adjusted $XX adjusted points, XX.X% in per We $XXX was EBITDA, operating operating XX.X%, EBITDA

whereas Of making A in recovery. $XX More for differences, for we XXXX finally, note, portion results of second strong sales in supplier specifically, compared pass-through of X settlement the was a a product comparisons of the $X prior and periods. second And retroactive first year, currency to quarters and pass-through XXXX, of XXXX quarter delayed first favorable reflect both uneven is of to when the onetime timing quarter. which the the the from million, inflation benefited impact. million a of had mix these

we compared during the our adjusted margins. our unknown. driver in aftermarket healthy function for period was that of core plagued us business Corporate a prior to our included stand-alone that of on segment From with operating year $XX product the QX our timing XX.X%, Fuel at from the inflationary expanded positive back price were parent same in segments due reported of XX.X% largest million $X costs as an of settlement company. were similar guidance, strong supplier is corporate as a overall the and our mix. issue the the quarter of in pass-through million and inflationary year QX, of buildup year year. XXXX. Note separated full the margins former the this same The were to this prior pass-through but was performance margins although sales Systems QX strong segment the to prices standpoint, period of at XX.X% ahead

corporate in approximately in last forward, $XX spin. provided to continue with million year We going projections expect quarterly costs at line

bridge me which presentation. the and Let and EBITDA, Pages now our XX find on revenue can you in XX

sales CV and in quarter performance have quarter Our $X affected pockets mainly the benefit in million, volume in sales contrast, $X from was of receded favorable of headwind softness Inflationary pressures to increases By cost pass-through was adjusted lower we million of mix, FX a due with only by and Europe. was tailwind a inflationary residual million. sales which saw remaining. a this mainly of $XX small

finalized of more of in XXXX price QX basis on recovery this program after consistent a in was versus lump Negotiation results with and profitability, moving and sum expectation customer segment period. line in

savings $X of in $XX other more retroactive $XX be into non-run $XX and relates settlement with line $XX $XX previously cost. addition The to XX. saw QX with offset line supplier in offset million costs. $XX pricing in other operations of SG&A and were of savings, settlement costs Page R&D part further reduced rate to and costs the down of reduced million $XX an million costs XXXX Employee of issue million of were million. funding partially cash expectations production Corporate quarter by $X breaks Of to noted. million, Turning pass-through million market in million. million $X from and in to $X were the The up million supplier million. supplier favorable

resources continue was higher of we working in we revenue. to and of disciplined projected generated and a capital cash free optimization basis. During come for run but drive slightly daily the $XX the guidance of of a processes in full spend X% flow Capital as million the of rate to on on still year basis, quarter management our be in quarter,

our cash, availability. $XXX committed We with in Next, revolver million turning liquidity. million to quarter the ended of $XXX

Our net leverage is less EBITDA. than Xx

to quarter end, to interest be of our our foundation due subsequent semiannually. to senior business committed having that amount a X.XX% to ample execute million XXXX liquidity and we secured $XXX are strategy. and run strong notes To We financial end, principal issued with paid

The planned. upsized bear we outstanding net on the to at to notes facility. Loan rate our offering X.XX% the repay an from Due under million $XX the drawn the proceeds of interest we demand, facility we our Term and B revolving down $XXX million credit and had strong annual original used the and investor borrowings

we outstanding million available our As is of us. the a have and consequence, $XXX entire revolver to draws no

for financial capital were fees with stronger, us liquidity. more while our and offering our for meet corporate funds expenses in This provides goals the and used one a helped cost-effective connection of many and issuance to purposes. the Additional pay improving year structure general

guidance. next our Moving XXXX to

line both Brady first quarter in I As results mentioned, our are with trending full our year guidance. and

result, as former a earnings efficiencies, on we parent exit cash reaffirming earnings operational guidance presented sales. Overall, aftermarket and grow expect our we to continue XXXX last generation are with strong and As drive we we the our agreements call. the in

want And move message I strong Q&A to Brady's regarding now shareholder with we'll reiterate discipline on to and that, the of closing, portion returns. Poly? focus call. In our generating our financial

Operator

from Scholl Your Jake Instructions] BNP line comes Paribas question the from of Exane. [Operator first

Thomas Scholl

Congrats on the the just great of quarter. Could color year. about seasonality you how provide a bit little think we on should a rest for of

of we there second some So mind. into the we factors roll have but are keep in the onetime items, just off other to quarter, any

Brady Ericson

a be move from quarters. know revenue depending quarter just and always tend Things a will a are ends. kind it holidays bit around lot of last lighter. on general, into to consistent people get of want little think with to I and to when year. No, be are standpoint specific I the bit a of end In QX little the QX when going

the have we the some well QX. in QX a shutdowns be Obviously, as to in in U.S, tends but good summertime strong Europe quarter in as

kind the noise from revenue again, similar probably with So of from any it'd last out once an be overall take recoveries year you cadence customer

Thomas Scholl

that the think spin. How it. cleared some the Got the guys in priorities? allocation had you of Loan shift covenants in up should have now we And any then after initial restrictive about Term your you capital more B

Brady Ericson

over if Well, obviously, restrictions kind buybacks both have we as on a priorities as had the time. well the anywhere some TOB The limitations I think sweeps and allocation don't same, of of got we capital the lot dividends punitive remain restrictions. one cash but

we And us we of cash have we think the little probably to free more allow on cash will on more so continue have us need. utilize I that because and do up than to hand a hand bit it

more that So we'll deploy as of look to well.

again, And us the down liquidity million. now is excessive. revolver, $XXX our that's And probably with paying over

Operator

session There this over Ericson questions time. back closing for Q&A will remarks. no I Instructions] close are to final Brady [Operator hand the at and

Brady Ericson

joining everybody. moving our quarter forward of Thanks have to Thanks, look morning, of past on Great. on long-term We for this a us nice forward line the the goals. sight achievements and day. with and building clear a

Operator

rest the of This day. concludes today's your Enjoy call. conference

may You disconnect. now

PHINIA (PHIN) 25 Apr 242024 Q1 Earnings call transcript