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    PHIN
    Earnings call· Jun 2026(Q2 FY26)

    PHINIA Q2 FY26 earnings call PHIN

    Jul 30, 2026 Source

    Executive summary

    PHINIA Q2 FY26 — Strong Performance and Strategic Acquisition

    PHINIA delivered a resilient Q2 FY26, marked by continued revenue growth in Fuel Systems and Aftermarket segments and strong adjusted EPS. The strategic acquisition of stoba Group is set to expand market exposure and capabilities, while the company maintained its commitment to shareholder returns and a healthy balance sheet amidst evolving macroeconomic conditions and tariff adjustments.

    Highlights

    5

    • Total net sales reached $940 million, marking a 5.6% increase year-over-year.

    • Adjusted EBITDA was $130 million, up $4 million YoY, achieving a 13.8% margin.

    • Adjusted earnings per diluted share increased 20.5% year-over-year to $1.53.

    • The strategic acquisition of stoba Group is expected to add $80 million in third-party revenue and $25 million in accretive EBITDA annually.

    • Returned $53 million to shareholders in Q2 FY26 through share repurchases and dividends.

    Concerns

    3

    • Revenue was negatively impacted by $21 million due to unfavorable foreign exchange rates in Q2 FY26.

    • Net tariff pass-through reduced revenue by $7 million in Q2 FY26, primarily due to anticipated refunds to customers.

    • Adjusted EBITDA margin decreased by 40 basis points year-over-year, partly due to a $9 million increase in incentive compensation costs.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year 2026 revenue
    $3.57 billion to $3.67 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $485 million to $515 million
    high materiality
    High
    Full-year 2026 Adjusted Free Cash Flow
    $210 million to $250 million
    high materiality
    High
    Full-year 2026 Adjusted Tax Rate
    30% to 33%
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Fuel Systems
    Delivered a strong quarter with sales up 5% and adjusted operating margin of 11%.
    		$584 million5%—11%
    Aftermarket
    Had sales up 6.6% with an adjusted operating margin of 17.1%.
    		$356 million6.6%—17.1%
    Total Segment
    Total segment adjusted operating income was $125 million, representing a 13.3% margin.
    		———$125 million

    Operational metrics

    29
    Adjusted EBITDA
    $130 millionup $4 million YoY
    Q2 FY26

    Representing a year-over-year increase of $4 million and a 40 basis point decrease in margin.

    Adjusted EPS
    $1.53up 20.5% YoY
    Q2 FY26

    Adjusted earnings per diluted share, excluding nonoperating items, compared with $1.27 in the same period of the prior year.

    Cash and cash equivalents
    $370 million
    Q2 FY26

    Exited the quarter with a cash position of $370 million.

    Available capacity under credit facility
    $450 million
    Q2 FY26

    Available capacity under our credit facility was approximately $450 million.

    Total liquidity
    $820 million
    Q2 FY26

    For a resulting liquidity of $820 million.

    Net leverage ratio
    1.3x
    Q2 FY26

    Our net leverage ratio was 1.3x, which is under our target of 1.5.

    Share repurchases
    $42 million
    Q2 FY26

    Share repurchases and dividends represented our primary use of capital with value back to our shareholders of $42 million and $11 million, respectively, in the quarter.

    Dividends paid
    $11 million
    Q2 FY26

    Share repurchases and dividends represented our primary use of capital with value back to our shareholders of $42 million and $11 million, respectively, in the quarter.

    Total capital returned to shareholders
    $53 million
    Q2 FY26

    During the quarter, we returned $53 million to shareholders in the form of dividends and repurchases.

    Remaining share repurchase authorization
    $216 million
    Q2 FY26

    $216 million remains under our current share repurchase authorization.

    Total capital returned since spinoff
    $665 million
    July 2023 - Q2 FY26

    In total, we have returned $665 million to shareholders through share buybacks and dividends since July 2023.

    Capital expenditures as % of revenue
    2.3%
    Q2 FY26

    Capital expenditures of 2.3% coming in below our target of 4%.

    Cash tariff refunds received
    $1 million
    Q2 FY26

    Including approximately $1 million in cash tariff refunds received.

    FX impact on revenue
    -$21 million
    Q2 FY26

    Unfavorable foreign exchange of $21 million as the Chinese renminbi, euro and Brazilian real strengthened against the U.S. dollar.

    Volume and mix impact on revenue
    $18 million
    Q2 FY26

    We saw a positive contribution from volume and mix of $18 million or 2% on positive customer pricing and higher sales in the Americas aftermarket.

    Net tariff pass-through impact on revenue
    -$7 million
    Q2 FY26

    Revenue in the quarter was reduced from net tariff pass-through of $7 million, affected mainly by anticipated tariff refunds from the government expected to be passed through to customers.

    SEM contribution to sales
    $18 million
    Q2 FY26

    Finally, SEM contributed sales of $18 million in the quarter.

    Net tariff expense and anticipated refunds impact on EBITDA
    $11 million
    Q2 FY26

    Net tariff expense and anticipated refunds were an $11 million contribution to earnings in the quarter.

    SEM contribution to EBITDA
    $3 million
    Q2 FY26

    Contribution from SEM was $3 million or a 16.6% margin in the quarter.

    Product mix, supplier savings, cost control impact on EBITDA
    -$1 million
    Q2 FY26

    Product mix, partially offset by supplier savings and cost control measures, was a $1 million headwind.

    Other costs impact on EBITDA
    -$9 million
    Q2 FY26

    Other costs, including corporate costs, were up approximately $9 million, primarily due to adjustments for short- and long-term incentive compensation.

    stoba Group full sales
    $200 million
    Annual

    While full stoba Group sales were approximately $200 million, this balance includes sales to PHINIA operations, which upon consolidation are eliminated as intercompany sales.

    stoba Group third-party sales
    $80 million
    Annual

    On a third-party basis, this asset will add full year sales of approximately $80 million.

    stoba Group adjusted EBITDA
    $25 million
    Annual

    And $25 million or 31% in adjusted EBITDA.

    stoba Group stand-alone margin
    12.5%
    Prior to acquisition

    When it was stand-alone, it was like 12.5% margin.

    Stock compensation increase
    $2 million
    H1 FY26

    But about $2 million in the first half of the year on our stock comp, which -- because our stock price is higher, we needed to revalue that and bump it up.

    Share repurchases
    $98 million
    YTD Q2 FY26

    For year-to-date totals of $98 million and $22 million, respectively.

    Dividends paid
    $22 million
    YTD Q2 FY26

    For year-to-date totals of $98 million and $22 million, respectively.

    Revenue growth (ex-FX, SEM, tariffs)
    2%
    Q2 FY26

    Excluding the FX impact, SEM contribution and tariff pass-throughs, sales were up 2% in the quarter.

    Industry KPIs

    9
    MetricValueDetails
    EPS$1.53USD/share
    Revenue$940 millionUSD
    Gross margin23%%
    Operating margin13.3%%
    Adjusted EBITDA ebita$130 millionUSD
    Operating income EBIT$125 millionUSD
    Cash investments balance$370 millionUSD
    Tariff impact mitigation$11 millionUSD
    Share buyback capital return$53 millionUSD

    Product announcements

    9
    ProductTypeDetails
    Heated tip MPFI systemlaunch
    24-volt starter programlaunch
    Complete common rail system programlaunch
    Open vehicle electronic distributionexpansion
    Global aftermarket footprint expansionexpansion
    New SKUslaunch
    500bar GDi systemlaunch
    Fuel delivery modulelaunch
    Next-generation GDi pumplaunch

    Deals & partnerships

    1
    stoba GroupGlobal technology partner specialized in high-precision components, systems and integrated solutions.Approximately 6x EBITDA

    Expands exposure in off-highway, industrial, and other markets. Adds aerospace and defense qualified location. Supports global semiconductor industry with high-performance equipment components.

    Risks & headwinds

    6
    Geopolitical and Trade-Related UncertaintyOngoing

    Discussed, not quantified

    Mitigation: Diversification across regions, customers, end markets, and products helped offset variability.

    Tariff ChangesOngoing

    Net tariff pass-through of $7 million reduced revenue in Q2 FY26

    Mitigation: Expected net refunds, with some cash settlements already received.

    Shipping ChallengesOngoing

    Discussed, not quantified

    Mitigation: Strong operational execution and disciplined cost management.

    Regional Production VariabilityOngoing

    Discussed, not quantified

    Mitigation: Strong operational execution and disciplined cost management.

    Light Vehicle Market Weakness (China)Q2 FY26

    Local market down in the mid-teens

    Mitigation: Diversification across regions and end markets.

    Higher Incentive Compensation CostsQ2 FY26, with additional booking in H2 FY26

    Approximately $9 million increase in other costs in Q2 FY26

    Mitigation: Offset by additional global supply chain savings and productivity improvements in H2 FY26.

    What to watch in Q3 FY26

    5

    stoba Group acquisition closing

    Q4 2026
    CurrentDefinitive agreement signed, pending regulatory approvals.
    TargetAcquisition closed.

    Why it matters

    The acquisition is strategic, expanding market exposure and capabilities, and is expected to be accretive to EBITDA.

    Closing of the deal is expected in the fourth quarter of 2026 and will be funded with available liquidity.

    Q&A highlights

    8

    Why was guidance lowered despite positive market indicators in LPV, CV, and industrial sectors?

    Brady Ericson clarified that the revenue guidance midpoint was kept flat, with expectations for a stronger second half. Chris Gropp added that anticipated tariff refunds, which reduce sales by $7 million, were not included in the initial guidance.

    “I mean from a revenue standpoint, we kept it flat. And so really no change. We're always expecting the back half of the year to be a little bit stronger than the first half.”

    asked by Christian Zyla · answered by Brady Ericson

    2 min read5 chapters

    Detailed Narrative

    01

    stoba Group Acquisition

    PHINIA announced a definitive agreement to acquire the stoba Group, a global technology partner specializing in high-precision components. The acquisition, expected to close in Q4 2026, will be funded with available liquidity. stoba is projected to contribute $80 million in third-party revenue and $25 million in accretive EBITDA annually, expanding PHINIA's presence in off-highway, industrial, and aerospace & defense markets. The deal also adds an aerospace and defense qualified location and supports the global semiconductor industry, opening new avenues for growth and diversification.

    02

    Capital Allocation Strategy

    The company maintains a disciplined and balanced capital allocation approach, prioritizing investments in organic growth and strategic M&A while consistently returning cash to shareholders. In Q2 FY26, PHINIA returned $53 million to shareholders through dividends and share repurchases, with $216 million remaining under the current repurchase authorization. Since its spinoff in July 2023, the company has returned a total of $665 million to shareholders, demonstrating financial flexibility while keeping net leverage below its 1.5x target.

    03

    Operational Resilience and Market Conditions

    PHINIA demonstrated resilience in a mixed macroeconomic environment, effectively navigating geopolitical and trade-related uncertainty, tariff changes, shipping challenges, and regional production variability. The company's diversification across regions, customers, end markets, and products helped mitigate volatility. Demand conditions in key end markets, particularly the commercial vehicle industry, remained steady, supported by durable replacement cycle fundamentals.

    04

    New Business Wins and Product Launches

    The second quarter saw notable new business wins across both OE and aftermarket channels. Key Fuel Systems wins included a heated tip MPFI system for light passenger vehicles, a 24-volt starter program for Class 8 commercial vehicles, and a common rail system for agricultural applications. The Aftermarket segment expanded its global footprint, introduced over 2,650 new SKUs, and added more than 150,000 cross-references. Significant product launches included a 500bar GDi system, a fuel delivery module in India, and a next-generation GDi pump.

    05

    Tariff Recoveries and Financial Adjustments

    PHINIA received cash settlements for anticipated tariff refunds, which contributed $11 million to earnings in Q2 FY26. However, $7 million of this amount will be passed back to customers, resulting in a reduction in reported revenue. The company also experienced a $9 million increase in other costs, primarily due to adjustments for short- and long-term incentive compensation, reflecting improved economic value and cash generation performance by the teams.

    AI-generated summary of the company’s earnings call. Not investment advice.