PHINIA (NYSE:PHIN) reported fourth-quarter and full-year 2025 results that management said were in line with internal expectations, citing the benefits of a diversified footprint across regions, customers, end markets, and products despite what executives described as a volatile operating environment.
Fourth-quarter results and segment performance
For the fourth quarter, PHINIA posted net sales of $889 million, up 6.7% from the prior-year period. Chief Executive Officer Brady Ericson said the company delivered year-over-year growth in both segments for a third consecutive quarter.
By segment, Fuel Systems sales were $560 million, up 7.9%, with an adjusted operating margin of 10.7%. Aftermarket sales were $329 million, up 4.8%, with an adjusted operating margin of 15.8%.
Chief Financial Officer Chris Gropp said results included a full-quarter contribution from SEM and that the external environment “has not changed dramatically” versus prior quarters, though the company saw strength in Asia and the Americas that was partially offset by lower Fuel Systems sales in Europe. Aftermarket growth was driven primarily by pricing and tariff recoveries, partially offset by lower commercial vehicle sales in the Americas.
Drivers in the quarter: FX, tariffs, and mix
Management provided a bridge of quarterly revenue and adjusted EBITDA. Gropp said fourth-quarter sales benefited from:
- $25 million of favorable foreign exchange as the U.S. dollar weakened, mainly against the British pound and euro
- $15 million of tariff recovery
- $8 million from volume and mix, with strength in Asia and the U.S. including higher light passenger vehicle sales, partially offset by lower sales in Europe
- $12 million contribution from SEM (excluding FX impact)
Excluding FX impacts and SEM’s contribution, revenue rose 2.3% year over year, the company said.
On profitability, Gropp said adjusted EBITDA increased $6 million year over year, but margin declined 20 basis points. Corporate and other costs were a $6 million tailwind, “primarily R&D savings,” and net tariff recovery, supplier savings, and other overhead cost actions added another $5 million. Those benefits were partially offset by unfavorable product mix in Asia and the Americas. Gropp added that margins were diluted by FX, inclusion of SEM, and negative mix.
Full-year 2025: revenue growth, flat EBITDA, and cash generation
For the full year, PHINIA reported revenue of approximately $3.5 billion, up 3%, excluding final contract manufacturing sales from its former parent in 2024. FX provided a $45 million tailwind and tariff recovery added $38 million. Base business volumes were flat, and SEM contributed $20 million of sales. Excluding FX and SEM, revenue increased 1.1%, according to management.
Adjusted EBITDA was $478 million, flat year over year, with a 13.7% margin, down 40 basis points. Supplier savings and other cost actions of $26 million were offset by unfavorable product mix, a slight increase in employee costs, and net tariff pass-through. Gropp said both tariff and FX were each roughly a 20-basis-point headwind to margin due to dilution.
Segment details for the year included Fuel Systems revenue growth of 3.3% and a 40-basis-point increase in adjusted operating margin. Fuel Systems results included $33 million of FX impact, $20 million from SEM, and $13 million of tariff recoveries. Fuel Systems adjusted operating income was $244 million, up $16 million, with supplier savings partially offset by negative volume and mix.
Aftermarket sales increased 2.7% for the year, driven primarily by customer tariff recovery and favorable FX. Aftermarket adjusted operating margin was 16.2%, down 30 basis points, which Gropp attributed primarily to the dilutive impact of tariff recoveries.
On cash flow, PHINIA reported $312 million of cash flow from operations and $212 million of adjusted free cash flow, which management said came in above its guidance. Liquidity totaled $859 million, including $359 million of cash and cash equivalents and about $500 million of available credit facility capacity. The company also reduced debt by $24 million during the year.
Business wins, portfolio expansion, and capital allocation
Ericson highlighted new business wins across light vehicle, commercial vehicle, Off-Highway, Industrial, aerospace, and alternative fuel applications during 2025. In the fourth quarter, he cited Fuel Systems wins including a third aerospace and defense contract for a post-combustion fuel valve, truck contract extensions with global commercial vehicle OEMs, and a new win in India for port fuel injectors used with compressed natural gas.
In Aftermarket, Ericson said demand continued to be supported by an aging global vehicle fleet and an expanding portfolio, and the company added approximately 5,800 new SKUs over the year.
The company also discussed capital allocation. Ericson said that since the spin, PHINIA has repurchased 9.8 million shares, or about 21% of the original share count, returning over $500 million to shareholders through repurchases and dividends. During the fourth quarter, the company returned $40 million to shareholders through dividends and buybacks. Gropp said full-year share repurchases totaled $200 million, including $30 million in the fourth quarter, and dividends totaled $42 million for the year. Management also noted an 11% dividend increase and a $150 million increase in the share repurchase program announced weeks earlier.
2026 outlook: modest growth, stable-to-improving margins
Looking ahead, Gropp said industry volumes are expected to be “flat to slightly down globally,” inclusive of battery electric vehicle sales. Management expects to offset market conditions through share gains in Aftermarket and increased gasoline direct injection products, as well as growth in Off-Highway, Industrial, and Other end markets.
For 2026, PHINIA guided to net sales of $3.5 billion to $3.7 billion. At the midpoint, Gropp said the company would expect mid-single-digit sales growth inclusive of FX and low-single-digit growth excluding FX. The company guided adjusted EBITDA of $485 million to $525 million, implying an EBITDA margin of 13.7% to 14.3%, and adjusted free cash flow of $200 million to $240 million. The adjusted effective tax rate is expected to be 30% to 34%.
In Q&A, Gropp said the company’s guidance assumes tariff impacts are roughly breakeven, with an additional quarter of tariffs in early 2026 expected to add revenue with little margin. He also said FX contributes to revenue but is “basically at margin.” Management added that there was nothing meaningful embedded in the guide related to commodity impacts, noting copper and aluminum as key inputs and stating commodity pass-throughs generally flow through its contracts.
Management also said the third aerospace and defense contract referenced on the call is with the same customer as the first two, and that the third program is expected to start in 2027. Ericson added that the company plans to provide more detail on end markets at an Investor Day scheduled for February 25 at the New York Stock Exchange.
About PHINIA (NYSE:PHIN)
PHINIA Inc engages 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 and light vehicles, and industrial applications. The company operates through Fuel Systems and Aftermarket segments. The Fuel Systems segment provides advanced fuel injection systems, including pumps, injectors, fuel rail assemblies, and engine control modules; fuel delivery modules; canisters; sensors; and electronic control modules.
