PHIN - Earnings call transcript Q3 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the PHINIA Third Quarter 2024 earnings call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Kellen Ferris, Vice President of Investor Relations.

Kellen Ferris

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

our this conference website, available are materials referencing including issued call were morning in be on will slide that and deck Our a we remarks. PHINIA's Investor Relations

We webcast. broadcasting are this also via call

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

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

Brady Ericson

you, with up quarter a detail brief Thank before joining start some for overall quarter everyone discussion of comments we'll review and open provide our key for you performance. additional and call the provide Kellen, third Chris on will to in in I'll us this financial financial questions. morning. some the our thank accomplishments

the pleased cash segment. Fuel XX% of quarter flow. of to our our our segment, to of partnerships operational reflects of respect our driven free about recent for of strength during share results This led markets our resilience challenging and environments business by resiliency products, Our quarter in Systems new of consistent sales, segment. With the Aftermarket developing the in successful strong our exciting the P&L, another the execution our to and I'm adjusted accounts quarter includes team. strategy, another business the in Aftermarket performance expanding most our performance of of long-term which This our strong launching growing ongoing and

first agreements, unsecured exited contract with replacing all high-cost strengthened our our and sustainability we sheet manufacturing our with notes, report. have Finally, CMAs, parent published new former long-term have material debt balance or by

Now quarter Slide to the results, on third on X. starting moving

This on item of like-for-like basis I one time spin. financials quarterly note. post a are comparing is standalone first Before the begin, we

quarter remained environment within with turn, tensions expectations dynamic persisted. in range macro currency sales strong volatility the the our on which these quarter, third results X.X% Systems execution sales. prior Despite and and and period X.X% segments. Lower third Fuel $XXX excludes business of geopolitical in sales. basis, were quarter line from as the strong During financial In inflation, were by offset year down sales our or million, CMA resilience the Aftermarket sales net factors, segment reflect an were same our of partially the the adjusted down

former no reported we've $XXX As growth mentioned, our parent. We material in our of led in was Systems point Fuel increase. Fuel adjusted year-over-year sales million, profit reduction Systems, with a performance EBITDA XX Combined and now margin there segment CMAs basis in segment expansion. controls operating income. the with in Aftermarket to reflects solid the both exited in cost and all positive segment. in conversions This segments Despite degradation

capabilities We strengthen also the processes. internal and systems to build continue our right and

cash free $XX adjusted at flow Our healthy million. remained

liquidity up cash million and $XXX This is undrawn at share buybacks account And shareholders our us approximately remains million dividends. XXXX. balance equivalents to million, total via and Our billion $XX $XXX strong return into year-end sheet our enabled cash of to taking $X when with performance from revolver.

once what recent across We expertise X. support move lines leverage our value. wins by clearly Now we ensure customers research our let's again to Slide and engineering product geographies. is proprietary and to shown our This

India's and controlled market Conquest high-volume vehicle automaker injection system automaker win for a call in win luxury duty common few. A forklifts Let use compact an diesel GDi off-highway with the system moving rail generators. a in electronically pressure in SUVs. win European growing combustion low for excavators, a trucks engines for And with me line with product in out to a second for use diesel Slide and pump. X. U.S. for Conquest a GDi light market A on light application

agreement renewed in groups, North and agreement segment major our first-time customer Aftermarket customer business customer a global American into one agreement Our new with Europe expand with independent signed of a our group cooperation their with a in signed Mexico. largest a to aftermarket

evidence customers leading Our expanding existing are relationships and give trust to In trusted business technology and winning is success brands. them new innovative, forming our we products. segment quality we're offerings with having and The Conquest us deeper of further our turn, Aftermarket customers.

Now sheet our of issuance the bolster notes due quarter X let's replacing XXXX. capital million of in strong We in move debt steps a the for discussion Slide high-cost $XXX senior took balance by already to further to our allocation with actions. unsecured

Term our also B both and extinguished less now share have which loans. A items, Loan Loan is respect and other agreement, amended now with among Term our We buybacks. credit to payments restrictive dividend We've

approximately on shown comfortable net X.Xx. the of As Slide rates, X, a given leverage lower with targeting we're

our Additionally, $XX shares after our of share $XXX opportunistically authorization repurchased increased outstanding during Board we quarter, million repurchase million. the by the

of $XXX the the approximately XXXX. repurchase end to of $XXX of open million million $XXX quarter, As program. repurchase of spin our in July X.X shares, outstanding million In since our share total XX.X% million total, remains of shares, or the on original we spent

share. of and growth company's potential. long-term to confidence actions paid commitment $X.XX indicative dividend also our the shareholders These our are in We value to a returning quarterly of per

strength Our our strong highlights strategies execution cash the position of team. and our efficiency of and

returning of well as shareholders to be to balanced with potential continue topic last transactions, on today and competitive and long-term our want share cash organically via business the buybacks paying in dividends. The ESG. is growth, drive disciplined prioritize I to via capital touch will investing to both and opportunistic deployment as we as We M&A

grow goal our sustainable to efficient, is even manner. more impactful As operate in always, and an and

which all which we and strategies encourage read you on our quarter, sustainability We found our our website. the During can to sustainability highlights the XXXX published report, initiatives. first of performance, report, be

in our to the the a embed with continue progress by on macro independent to throughout resilience we our business for stakeholders are balance responsibility fully focus given will summary, business. In company. profitable being values growth, business, by we continuing value pleased the long-term as mission-driven As Furthermore, made strengthening we we as are encouraged sheet of and our creating well the ongoing corporate headwinds. a living our

to We the are well ahead. that capitalize growth opportunities positioned on are still

results to As will such, our we This in our long-term strategies, value will leveraging create customers, us outlook Chris? sheet for it free who our Chris over support these strong healthy discuss expense the and invest to in to our maintaining continue hand disciplined attractive flow to for I'd will employees, and like our returns year. and our invest while to management. us our through balance continue QX that, deliver allow communities shareholders. With for walk cash

Chris Gropp

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

website. reminder, which presentation, a non-GAAP our will are of financial on in both As found in that and measures can reconciliations I release of discuss today's the all be press

Moving to generated Page in sales, the million down Revenue prior X.X% versus quarter in trends ago. X quarters year market in as a the reflects we similar the $XXX deck. X as

versus effect the Excluding of in year X.X% reduction the sales a contract ago. manufacturing, is

parent of material completed this we with quarter. As contract former our effectively agreements have of end as manufacturing all the Brady noted,

volume Americas sales, benefit by or during higher Our Systems the XX.X%, for manufacturing. Aftermarket increase segment to year-over-year in quarter. The were segment from a volumes with X.X% X%. of Sales in the Fuel higher Europe and mild contrast, in continue from pricing the increase contract down of excluding a benefited revenue effects

with or Systems to the continue and pricing non-commodity by within correct we commercial Fuel in China, sales, as lower issues offset Europe customers impacted Our increased Europe work to was Group vehicle lagging CV and and some commodity Americas. revenue, by pricing

quarter earnings QX Fuel XX.X% of expected, margins mix. XXX positive million a points product year-over-year earned and on was points. ending points. Margins increase margin XX.X%, positive due and Our were a up $X of our conversions Systems increases. by corporate back and million for to XX.X%, with reductions at healthy the inflation points the a From and basis and the XX of and share $XX and and basis diluted at affected, expanding segment sales standpoint, Adjusted positive adjusted core of recoveries Systems offset adjusted reported $X.XX. EBITDA margins. and strong XX.X%, performance pricing, a cost and representing overall increase was income margins Fuel and Year-over-year $X strong by were from segment Aftermarket basis were costs of cost segments per XXX as year-over-year QX basis XXX million segments at savings both operating inflationary controls. our adjusted pass-through points Aftermarket price standalone million. business We operating all pricing cost supplier XXX supplier basis employee segment XX.X% up year-over-year represents $X that benefited which $XXX margin, and million margin in

headwind affected our lower former Our China, a manufacturing sales strength affected sales by which due $XX in of partially in softness the and also ongoing CV to Europe by million sales was of the in volume, with wind in contract aftermarket performance by sales parent. offset It was Europe. quarter in down was

with or increases Similar year-over-year basis, than to manufacturing, X.X%. Excluding are of down the year-to-date of largely in $XX aftermarket we on in offset down X.X%. sales X.X%, X% saw adjusted a by contract our our were less sales million trends Systems sales Fuel in decrease QX, a

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

mix million along employee and with million. costs on and quarter, $X of $X recoveries the margin. in sales EBITDA, $XX million $X supplier adjusted spending of For offset the increased $XX Pricing saw and by $XX while of million expected, million. a and of contribution volume positive manufacturing XX% as in increases R&D Corporate increased strong million continued negative other quarter or costs was savings other

balance our for a sheet recap flow. quick cash Now and of

We have facilities available and approximately under substantial credit of billion. equivalents current and cash capacity our cash liquidity $X with

completed X.X year, favorable in and interest floating rates. Net with This cash result, extended our with mentioned, maturity debt the replaced debt operations second and the million. QX we unsecured $XX rate notes as been a has quarter, by years issuance we was portion As secured of Brady profile rate due in in from fixed this XXXX. was more refinancing of a third the

$XX the flow million adjusted to and quarter spend daily than was and of of free drive of of year-to-date. management disciplined and of a our processes we quarter, continue X% capital Capital working as X.X% cash the basis. sales million in less generated was in be During $XX resources on optimization we

just year. to We the below are target our projecting X% for spend come in

XXXX to moving to respect quarter we anticipated. previously our continue fourth third the quarter than and to XX. into Slide softness greater expect Now to the be market With guidance, in results seen

margin EBITDA free range The $XXX the rate meet generation XX.X%. high team's are expected for remains is adjusted adjusted changing $X.XX search coming million result. drive billion, flow and billion solid end both We the a of of tax has unrelenting new operational in $X.XX solid in quarter to our the EBITDA rest report ability million continue we enabled adjusted our market to of in Overall, now the our cash and at flex we between to XX.X% guide. XXXX revising to segments. In same as areas us in of and guidance and growth adjusted operations $XXX closing, and be we range. therefore and to prior and be efficiencies to to while earnings needs projected focus expect sales to with shared as is cash The overheads

confident future the us growth we financial support balance to and strategic our current strong ability actions cash in with to are flow meaningful to sheet Our that, for focused value am employees. With as flexibility provides initiatives. creating we'll shareholders, continue have I we growth. to generate very our customers, our and sustainable move call. And the Brady are mentioned, expected drive Q&A to of portion on undertaken now as communities our

Operator

take We'll Jake Scholl BNP Instructions] at first Paribas. our [Operator from question

Thomas Scholl

Congrats on strong quarter. another

a can should and color provide sales is, by bit and you're little really outlook of your question first segment? how about the in end markets how the on my thinking So think we -- you about for for markets earnings quarter just fourth

Brady Ericson

Yes.

continue to in on QX. first is expectation think some going softness things think outlook, I I remain saw that in soft to QX. We our the are

think tale I a it's of of two kind halves.

first strong. relatively The half still was

Second as being a bit half weak. little

recovery. before I think into that will continue XXXX a little bit

Chris Gropp

It's mainly CV.

Brady Ericson

CV. going I be is of consistent. Light to kind think vehicle

teams kind XX% perspective. aftermarket our a and around Fuel again, still expect to be -- I continue performance year, flat. operating think we good downside relatively said, grew an next it's have our Systems income and that a while revenue on a we've north to standpoint, managing to think uptick the it margin expectation we of a little may XX% from From of but have I going expect as bit of

from So we think bit trying take perspective I in saw kind you little QX I to what if softer margins. revenue it's at in a QX of our hold versus look numbers, think just a the and a

Thomas Scholl

of And then the second to you was from said, half there the at as the of half first kind market just -- a kind midpoint. stepdown

about $XXX to a million $XXX of EBITDA second in half. million first Your the guide stepdown from implies half in

a how else there we second something the keep Or think XXXX? should as this into should run year So is about half maybe that of rate in mind? we

Brady Ericson

Yes.

think as I that's are things mentioned, I primarily -- is systems one fuel affected. think I our the

see growth. year-over-year solid Our aftermarket continues to

starting in first on I then what continue QX. I EPAXX we're -- in the the expecting it's that whether sales that the think similar North will And soft pre-buy to And to XXXX, applications. we're Fuel other as next segment side or into will to And indications think some year Systems that's whether in think soft half. CV have the is additional have remain just launches QX, CV or I then QX the hear recovery America well. also we start coming will for it's QX

two it's just tale I to be similar year. of -- probably this going halves So it's think a

softer softer second. stronger was think the and stronger, the I And the half next be will first First second. in half year in in

Operator

questions. Brady And the no Ericson over I have at further time, closing to remarks. like turn we Instructions] to for conference [Operator this would back

Brady Ericson

kind you know of today, Thanks, have with of lot I a But appreciate lot a do already folks. for joining. I know so joining. up there's follow-up all Great. I of earnings lined of coming a everybody, lot out we

how to continuing of hopefully capital. of a allocate our journey continue in we results happy And forward to Looking consistent our of everybody kind delivering Halloween. kind financially has and be disciplined

you. safe. stay So Thank

Operator

you participation. today's this call. Thank conference for And concludes your

now may disconnect. You

PHINIA (PHIN) 31 Oct 242024 Q3 Earnings call transcript