Phinia, a manufacturer of fuel systems, electrical systems and aftermarket products, reported its second quarter 2023 results, celebrating key wins in strategic growth markets, and reaffirmed its full-year outlook.
Phinia said some of its key highlights included:
- Securing a major business award to supply injectors to a European OEM for heavy duty commercial vehicles compliant with Euro 7 emission standards;
- Being selected as the main partner to a US Department of Energy (“DOE”) project announced on May 19 and funded by the DOE, to advance research, development, and implementation of technologies to reduce greenhouse gas emissions. The project will feature Phinia’s new hydrogen medium pressure, direct injection fuel system technology.
- Securing a contract to supply powertrain domain control units (PDCUs) to a leading Asian OEM.
- Being awarded the contract to supply starter motors for medium duty applications to a large US OEM, supporting their major engine program.
Phinia operated as part of BorgWarner Inc. for the entire second quarter of 2023 prior to the spin-off on July 3rd, and the historical financial measures presented in this release were derived from BorgWarner Inc.’s accounting records and are presented on a carve-out basis, the company said. Highlights from Q2 include:
- Sales growth of 11.4% year-over-year to $887 million.
- Operating income of $56 million and adjusted operating income of $94 million, resulting in an operating margin of 6.3% and an adjusted operating margin of 10.6%, a year-over-year improvement of 10 bps and 180 bps, respectively. Margins benefited from resolution of customer commodity and inflationary settlements with retro effect to the beginning of the year. Corporate cost allocations were also lower in Q2 versus prior year.
- Net earnings of $35 million with net margin of 3.9% and adjusted EBITDA of $130 million with adjusted EBITDA margin of 14.7%, a 140 bps year-over-year improvement.
“Our Q2 results reflect a positive trend, and we expect to maintain this momentum moving forward,” said Brady Ericson, president and CEO of PHINIA. “Now that the spin-off is complete, Phinia is a more focused organization, better able to invest in and grow our business, and increase shareholder value by leveraging our core technologies and competencies. We are focused on growing our commercial vehicle and independent aftermarket businesses, which will benefit from the transition to carbon-neutral and carbon-free fuels. With these strategic initiatives, alongside our long-standing partnerships with world-leading OEMs, we are confident we will find multiple avenues for sustainable profitable growth.”
2023 Full Year Guidance
The Company is affirming it’s 2023 full year guidance, with expected sales of $3.5 billion to $3.6 billion and adjusted sales of $3.45 billion to $3.55 billion, full year adjusted EBITDA of $485 million to $505 million, and adjusted EBITDA margins of 13.8% to 14.3%.