PHINIA Inc. (NYSE: PHIN) reported its fourth-quarter and full-year 2025 financial results, concluding its second full year as an independent entity with performance figures that met the high end of its previous organic growth targets. The automotive and industrial supplier maintained a robust capital return strategy, repurchasing approximately 21% of its outstanding shares since its 2023 spin-off from BorgWarner.
Quarterly and Annual Financial Overview
For the quarter ending December 31, 2025, PHINIA generated net sales of $889 million. The company’s adjusted EBITDA for the period reached $116 million, representing an adjusted EBITDA margin of 13.0%. Performance was characterized by strong demand in the Asia and Americas regions, though these gains were partially moderated by lower sales volumes in Europe. Adjusted diluted earnings per share for the fourth quarter stood at $1.18.
The full-year 2025 results reflected a resilient operational posture despite broader market volatility. PHINIA reported full-year adjusted sales of $3,414 million. Key performance metrics for the year included:
Adjusted EBITDA Margin: 14.1% for the full year.
Liquidity: Total liquidity of $859 million as of year-end, including $359 million in cash and cash equivalents.
Shareholder Returns: The company returned $40 million to shareholders in Q4 through $30 million in share repurchases and $10 million in dividends.
Segment Performance and Strategic Realignments
PHINIA’s Fuel Systems segment recorded Q4 net sales of $560 million, supported by a significant “conquest” win involving a post-combustion fuel valve for a global aerospace and defense contractor. The Aftermarket segment contributed $329 million in quarterly net sales, benefiting from the addition of approximately 5,800 new SKUs throughout 2025.
Notably, the company executed a strategic reporting shift in the fourth quarter, moving a portion of its Original Equipment Service (OES) business from the Aftermarket segment to Fuel Systems. Management indicated this change is intended to streamline the sales structure by aligning distribution with the manufacturing locations of those products.
2026 Outlook and Industry Context
Looking ahead to 2026, PHINIA issued guidance reflecting a cautious but stable outlook for the internal combustion engine (ICE) market. The company anticipates full-year net sales between $3.515 billion and $3.715 billion. Adjusted EBITDA is projected to range from $485 million to $525 million, with margins expected between 13.7% and 14.3%.
The guidance is set against a macro environment where industry volumes for light vehicle ICE production are expected to decline by mid-single digits, while commercial vehicle ICE volumes may see low-single-digit decreases. Despite these headwinds, PHINIA expects to maintain an average annual adjusted free cash flow of over $200 million through the end of the decade.
Strategic Growth Drivers
The company’s growth strategy remains focused on “right-to-win” categories, particularly in alternative fuel technologies and the heavy-duty commercial vehicle sector. In India, the company secured new business for port fuel injectors used with compressed natural gas (CNG), highlighting its pivot toward lower-carbon mobility.
Management emphasized a disciplined approach to capital allocation, targeting a net leverage ratio of approximately 1.5x. For 2026, the Board has already approved an increased share repurchase program of up to $750 million.
Key Performance Indicators
| Metric | Q4 2025 Result | 2026 Guidance |
| Net Sales | $889 Million | $3.515B – $3.715B |
| Adj. EBITDA Margin | 13.0% | 13.7% – 14.3% |
| Adj. Free Cash Flow | — | $200M – $240M |
| Net Leverage | 1.3x | ~1.5x (Target) |
PHINIA executives noted that the company’s 2025 accomplishments, including its first acquisition of the SEM business in August, provide a foundation for continued operational consistency. The company plans to prioritize modernizing its IT landscape and targeting further opportunities in off-highway and aerospace sectors throughout 2026.
Reasons to Pass on PHIN
- Exposure to ICE decline: 2026 outlook reflects mid-single-digit declines in light vehicle ICE production and low-single-digit drops in commercial vehicles.
- Soft Europe volumes: Q4 growth in Asia and the Americas was partly offset by weaker European sales.
- Limited growth profile: 2026 revenue guidance implies modest top-line expansion in a subdued demand environment.
- Stable, not expanding margins: EBITDA margin guidance of 13.7%–14.3% suggests limited incremental margin upside.
- High ICE concentration: Core Fuel Systems business remains tied to internal combustion platforms amid electrification trends.
- Segment reclassification: OES reporting shift may affect year-over-year comparability.
- Increased buyback focus: Up to $750 million in repurchases prioritizes capital returns over potential reinvestment.
- Higher leverage target: Net leverage expected to move toward ~1.5x from 1.3x.
- Execution dependency: Free cash flow targets assume sustained cost control and stable industry conditions.