PHINIA INC.
For the period ended Jun 30, 2026. Filed Jul 30, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 30, 2026
PHIN$68.94-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-04-30.
0001968915-26-000070
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-30.
0001968915-26-000111
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 60 previous paragraphs and 99 current paragraphs.
39 unchanged; 19 reworded; 23 added; 2 removed; 0 previous and 18 current paragraphs rearranged.
Tables are not compared: 7 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Trade Policy and Tariffs
Current report
As of June 30, 2026, we expect to receive tariff reimbursements from the federal government related to the International Emergency Economic Powers Act (IEEPA) and tariff rulings from the United States Supreme Court and the Court of International Trade. Although we have started to receive reimbursements for certain claims, the ultimate timing of collection is uncertain and subject to changes in trade policy. The tariff environment remains highly dynamic, and the specific tariffs applicable to goods imported continue to evolve, including with respect to the U.S.-Mexico-Canada Agreement, which is currently under trilateral review.
Current report
1 Cost of sales in the three months ended June 30, 2026 included a benefit related to one-time IEEPA tariff refunds, while net sales included a reduction related to estimated amounts to be returned to customers for these amounts.
Current report
Other operating income, net
Current report
Interest expense was $21 million in the three months ended June 30, 2026 and 2025.
Current report
Provision for income taxes was $27 million for the three months ended June 30, 2026, resulting in an effective tax rate of 40%. This is compared to $29 million, or 39%, for the three months ended June 30, 2025. The effective tax rates for the respective periods were comparable to one another.
Current report
The following table provides a reconciliation of net earnings per diluted share to adjusted net earnings per diluted share:
Current report
Aftermarket segment adjusted operating margin was 17.1% for the three months ended June 30, 2026, which was comparable to the three months ended June 30, 2025.
Current report
RESULTS OF OPERATIONS
Current report
Six Months Ended June 30, 2026 vs. Six Months Ended June 30, 2025
Current report
1 Cost of sales in the six months ended June 30, 2026 included a benefit related to one-time IEEPA tariff refunds, while net sales included a reduction related to estimated amounts to be returned to customers for these amounts.
Current report
Restructuring expense
Current report
Other operating (income) expense, net
Current report
Interest income
Current report
Interest expense
Current report
Interest expense was $41 million and $40 million in the six months ended June 30, 2026 and 2025, respectively.
Current report
Provision for income taxes
Current report
Excluding the impact of items not related to the Company’s ongoing operations, the Company’s effective tax rate associated with ongoing operations was 30% for the six months ended June 30, 2026 compared to 36% for the six months ended June 30, 2025.
Current report
Segment AOI excludes certain corporate costs, which primarily represent corporate expenses not directly attributable to the individual segments. Corporate expenses not allocated to Segment AOI were $52 million and $49 million for the six months ended June 30, 2026 and 2025, respectively. The increase in corporate expenses was primarily related to employee compensation, mainly driven by the addition of a third tranche of performance stock units under the Company's stock incentive plan and increased performance-based incentive compensation.
Current report
Fuel Systems segment adjusted operating margin was 10.2% for the six months ended June 30, 2026, compared to 10.3% for the six months ended June 30, 2025. The decrease was primarily due to unfavorable product mix in Europe and Asia, increased employee costs, and the dilutive impact of foreign currency change to margin, partially offset by the timing of tariff recoveries.
Current report
Aftermarket segment adjusted operating margin was 17.1% for the six months ended June 30, 2026, compared to 16.9% for the six months ended June 30, 2025. The increase was primarily due to the timing of tariff recoveries, which offset an increase in employee costs.
Current report
Proposed Acquisition of the stoba Group
Current report
On June 30, 2026, PHINIA announced that it entered into a definitive agreement to acquire the stoba Group, a global technology partner specialized in high-precision components, systems, and customized manufacturing solutions. The proposed transaction is expected to close in the fourth quarter of 2026, subject to customary regulatory approvals and closing conditions. The Company expects to fund the approximately $150 million purchase price through available liquidity.
Removed paragraphs (2)
Previous report
Other operating expense (income), net
Previous report
The Aftermarket segment’s Segment Adjusted Operating margin was 17.0% for the three months ended March 31, 2026, compared to 16.7% for the three months ended March 31, 2025. The Segment Adjusted Operating margin increase was primarily due to cost control measures and tariff recoveries.
Reworded paragraphs (19)
Previous wording
On August 1, 2025, PHINIA completed the acquisition of Swedish Electromagnet Invest AB (SEM), a provider of advanced natural gas, hydrogen and other alternative fuel ignition systems, injector stators and linear position sensors, for $47 million, comprised of $15 million of cash consideration and $32 million cash used to extinguish debt assumed through the acquisition. See Note 2, “Acquisition”, for further discussion.
Current wording
On August 1, 2025, PHINIA completed the acquisition of SEM, a provider of advanced natural gas, hydrogen and other alternative fuel ignition systems, injector stators and linear position sensors, for $46 million, comprised of $14 million of cash consideration and $32 million cash used to extinguish debt assumed through the acquisition. See Note 2, “Acquisition”, for further discussion.
Previous wording
The global economy continues to grapple with semi-conductor shortages, supply chain disruptions, and economic and geopolitical tensions. These factors may affect production, pricing, and consumer demand. In addition, evolving trade restrictions, including export controls, and increases in tariffs could have a material impact on our business, financial condition, or results of operations, including increasing our input costs and decreasing the demand for our products. Although the nature of these trade restrictions and tariffs continue to change, they increase the risk for elevated inflation more generally, which may drive an increase in our other input costs.
Current wording
The global economy continues to grapple with semi-conductor shortages, supply chain disruptions, and economic and geopolitical tensions. These factors have affected and may continue to affect production, pricing, and consumer demand. In addition, evolving trade restrictions, including export controls, and increases in tariffs could have a material impact on our business, financial condition, or results of operations, including increasing our input costs and decreasing the demand for our products. Although the nature of these trade restrictions and tariffs continue to change, they increase the risk for elevated inflation more generally, which may drive and has driven an increase in our other input costs.
Previous wording
We expect improved earnings and cash generation in 2026, as we expect foreign currency, operational efficiencies, and share gains to more than offset a softening original equipment (OE) market. Continued economic and geopolitical uncertainty is expected to continue to impact light vehicle (LV) volumes, which are expected to decline by mid-single percentages in our key markets. Commercial vehicle (CV) volumes are expected to remain flat in our key markets. Assuming constant foreign exchange rates and excluding sales from acquisitions, we expect a modest increase in sales. Additionally, we expect to continue to be impacted by other macroeconomic challenges in 2026, which may include but are not limited to elevated inflation, supply chain constraints, market volatility, higher tariffs (particularly in Mexico and China), evolving trade restrictions, government shutdowns, geopolitical tensions, and changes in international trade relations.
Current wording
We expect improved earnings and cash generation in 2026 as compared to 2025, as we expect foreign currency, operational efficiencies, and share gains to more than offset a softening original equipment (OE) market. Continued economic and geopolitical uncertainty is expected to continue to impact light vehicle (LV) volumes, which are expected to decline by mid-single digit percentages in our key markets. Commercial vehicle (CV) volumes are now expected to decline by low-single digit percentages in our key markets. Assuming constant foreign exchange rates and excluding sales from acquisitions, we expect a modest increase in sales. Additionally, we expect to continue to be impacted by other macroeconomic challenges in the second half of 2026, which may include but are not limited to elevated inflation, supply chain constraints, market volatility, higher tariffs (particularly in Mexico and China), evolving trade restrictions, government shutdowns, geopolitical tensions, and changes in international trade relations.
Previous wording
Despite the near-term uncertainties, the Company maintains a positive long-term outlook for its global business and is committed to new product development and strategic investments to support its product leadership and growth strategies. There are several trends that are driving the Company’s long-term growth that management expects to continue, including expansion in the CV market, growth in overall vehicle parc that supports aftermarket demand, increased consumer interest in hybrid and plug-in hybrid electric vehicles, adoption of additional product offerings enabling zero- and lower-carbon fuel solutions for combustion vehicles, and continued expansion in the aerospace and defense industry. In addition, we believe we are well positioned to continue to expand our differentiated offerings and capabilities across electronics, software and complete systems.
Current wording
Despite the near-term uncertainties, the Company maintains a positive long-term outlook for its global business and is committed to new product development and strategic investments to support its product leadership and growth strategies. There are several trends that are driving the Company’s long-term growth that management expects to continue, including expansion in the CV market, growth in overall vehicle parc that supports aftermarket demand, increased consumer interest in hybrid and plug-in hybrid electric vehicles, adoption of additional product offerings enabling lower-carbon fuel solutions for combustion vehicles, and continued expansion in the aerospace and defense industry. In addition, we believe we are well positioned to continue to expand our differentiated offerings and capabilities across electronics, software and complete systems.
Previous wording
Net sales for the three months ended March 31, 2026 totaled $878 million, an increase of $82 million, or 10%, compared to the three months ended March 31, 2025. Cost of sales and cost of sales as a percentage of net sales were $690 million and 79%, respectively, during the three months ended March 31, 2026, compared to $624 million and 78%, respectively, during the three months ended March 31, 2025. The change in net sales, cost of sales, and gross profit for the three months ended March 31, 2026 was primarily driven by the impacts below.
Current wording
Net sales for the three months ended June 30, 2026 totaled $940 million, an increase of $50 million, or 6%, compared to the three months ended June 30, 2025. Cost of sales and cost of sales as a percentage of net sales were $724 million and 77%, respectively, during the three months ended June 30, 2026, compared to $693 million and 78%, respectively, during the three months ended June 30, 2025. The change in net sales, cost of sales, and gross profit for the three months ended June 30, 2026 was primarily driven by the impacts below.
Previous wording
SG&A for the three months ended March 31, 2026 was $115 million as compared to $107 million for the three months ended March 31, 2025. SG&A as a percentage of net sales was 13% for the three months ended March 31, 2026 and 2025. SG&A expenses increased period-over-period, primarily attributable to increased employee costs, including stock-based compensation.
Current wording
SG&A for the three months ended June 30, 2026 was $128 million as compared to $112 million for the three months ended June 30, 2025. SG&A as a percentage of net sales was 14% for the three months ended June 30, 2026, compared to 13% for the three months ended June 30, 2025. SG&A expenses increased period-over-period, primarily attributable to increased employee costs, including stock-based compensation, as well as foreign currency exchange impacts and professional fees.
Previous wording
Interest expense was $20 million and $19 million in the three months ended March 31, 2026 and 2025, respectively. See Note 13, “Notes Payable and Debt”, for further discussion.
Current wording
Restructuring expense was $8 million and$2 million for the three months ended June 30, 2026 and 2025, respectively. See Note 4, “Restructuring”, for further discussion.
Previous wording
Equity in affiliates’ earnings, net of tax was $5 million and $4 million in each of the three months ended March 31, 2026 and 2025, respectively. This line item is driven by the results of the Company’s unconsolidated joint venture.
Current wording
Equity in affiliates’ earnings, net of tax was $4 million in the three months ended June 30, 2026 and 2025. This line item is driven by the results of the Company’s unconsolidated joint venture.
Previous wording
The Company’s net earnings per diluted share was $0.96 and $0.63 for the three months ended March 31, 2026 and 2025, respectively. The Company’s adjusted net earnings per diluted share was $1.29 and $0.94 for the three months ended March 31, 2026 and 2025, respectively. The Company defines adjusted net earnings per diluted share, a non-GAAP measure, as net earnings per diluted share adjusted to exclude: (i) the impact of restructuring expense, separation-related costs, merger and acquisition costs, impairment charges and other gains, losses and tax effects and adjustments not reflective of the Company’s ongoing operations; and (ii) acquisition-related intangibles amortization expense because it pertains to non-cash expenses that the Company does not use to evaluate core operating performance. Management believes that adjusted net earnings per diluted share is useful to investors in assessing the Company’s ongoing financial performance, as it provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company’s core operating performance.
Current wording
The Company’s net earnings per diluted share was $1.05 and $1.14 for the three months ended June 30, 2026 and 2025, respectively. The Company’s adjusted net earnings per diluted share was $1.53 and $1.27 for the three months ended June 30, 2026 and 2025, respectively. The Company defines adjusted net earnings per diluted share, a non-GAAP measure, as net earnings per diluted share adjusted to exclude: (i) the impact of restructuring expense, separation-related costs, merger and acquisition costs, impairment charges and other gains, losses and tax effects and adjustments not reflective of the Company’s ongoing operations; and (ii) acquisition-related intangibles amortization expense because it pertains to non-cash expenses that the Company does not use to evaluate core operating performance. Management believes that adjusted net earnings per diluted share is useful to investors in assessing the Company’s ongoing financial performance, as it provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company’s core operating performance.
Previous wording
Segment AOI excludes certain corporate costs, which primarily represent corporate expenses not directly attributable to the individual segments. Corporate expenses not allocated to Segment AOI were $24 million for the three months ended March 31, 2026 and 2025.
Current wording
Segment AOI excludes certain corporate costs, which primarily represent corporate expenses not directly attributable to the individual segments. Corporate expenses not allocated to Segment AOI were $28 million and $25 million for the three months ended June 30, 2026 and 2025, respectively. The increase in corporate expenses was primarily related to employee compensation, mainly driven by the addition of a third tranche of performance stock units under the Company's stock incentive plan and increased performance-based incentive compensation.
Previous wording
The Fuel Systems segment’s Segment Adjusted Operating margin was 9.3% for the three months ended March 31, 2026, compared to 9.4% for the three months ended March 31, 2025. The Segment Adjusted Operating margin decrease was primarily due to unfavorable product mix in Europe and Asia, partially offset by cost control measures and supplier savings.
Current wording
Fuel Systems segment adjusted operating margin was 11.0% for the three months ended June 30, 2026, compared to 11.2% for the three months ended June 30, 2025. The decrease was primarily due to unfavorable product mix in Asia, partially offset by the timing of tariff recoveries and the SEM acquisition.
Previous wording
Restructuring expense was $3 million and$5 million for thethree months ended March 31, 2026 and 2025, respectively. See Note 4, “Restructuring”, for further discussion.
Current wording
Restructuring expense was $11 million and $7 million for thesix months ended June 30, 2026 and 2025, respectively. See Note 4, “Restructuring,” for further discussion.
Previous wording
Other operating expense (income), net was expense of $1 million compared to income of $2 million for the three months ended March 31, 2026 and 2025. The change in other operating expense, net was primarily driven by an increase in separation-related costs. Other operating expense (income), net was comprised of the following:
Current wording
Other operating (income) expense, net was expense of $1 million compared to income of $8 million for the six months ended June 30, 2026 and 2025, respectively. The change in other operating expense, net was primarily driven by a decrease in separation-related benefits. Other operating (income) expense, net was comprised of the following:
Previous wording
Provision for income taxes was $20 million for the three months ended March 31, 2026, resulting in an effective tax rate of 35%. This is compared to $24 million, or 48%, for the three months ended March 31, 2025. The effective tax rate for the three months ended March 31, 2026 decreased as compared to the prior year as a result of an uncertain tax position recorded discretely in the three month period ended March 31, 2025 that did not recur in the three month period ended March 31, 2026.
Current wording
Provision for income taxes was $47 million for the six months ended June 30, 2026, resulting in an effective tax rate of 38%, compared to $53 million, or 42%, for the six months ended June 30, 2025. The effective tax rate for the six months ended June 30, 2026 decreased as compared to the prior year as a result of an uncertain tax position recorded discretely in the six month period ended June 30, 2025 that did not recur in the six month period ended June 30, 2026.
Previous wording
The Company maintains various liquidity sources, including cash and cash equivalents and the unused portion of its $500 million revolving credit facility maturing in July 2028 (the Revolving Facility). As of March 31, 2026, the Company had liquidity of $808 million, comprised of cash and cash equivalent balances of $328 million and availability on the Revolving Facility of $480 million. Given the Company’s strong liquidity position, management believes that it will have sufficient liquidity and will maintain compliance with all covenants through at least the next 12 months.
Current wording
The Company maintains various liquidity sources, including cash and cash equivalents and the unused portion of its $500 million revolving credit facility maturing in July 2028 (the Revolving Facility). As of June 30, 2026, the Company had liquidity of $820 million, comprised of cash and cash equivalent balances of $370 million and availability on the Revolving Facility of $450 million. Given the Company’s strong liquidity position, management believes that it will have sufficient liquidity and will maintain compliance with all covenants through at least the next 12 months.
Previous wording
At March 31, 2026 and December 31, 2025, the Company had $328 million and $359 million of cash and cash equivalents, respectively, of which $315 million and $330 million, respectively, was held by our subsidiaries outside of the United States. We believe our existing cash and cash flows generated from operations and the Revolving Facility will be responsive to the needs of our current and planned operations for at least the next 12 months and the foreseeable future thereafter.
Current wording
At June 30, 2026 and December 31, 2025, the Company had $370 million and $359 million of cash and cash equivalents, respectively, of which $352 million and $330 million, respectively, was held by our subsidiaries outside of the United States. We believe our existing cash and cash flows generated from operations and the Revolving Facility will be responsive to the needs of our current and planned operations for at least the next 12 months and the foreseeable future thereafter. At June 30, 2026, the Company had total debt of $1,019 million.
Previous wording
Net cash provided by operating activities was $53 million and $40 million in the three months ended March 31, 2026 and 2025, respectively. The increase in cash from operating activities for the three months ended March 31, 2026 compared with the three months ended March 31, 2025 was primarily due to increased net earnings.
Current wording
Net cash provided by operating activities was $144 million and $97 million in the six months ended June 30, 2026 and 2025, respectively. The increase in cash from operating activities for the six months ended June 30, 2026 compared with the six months ended June 30, 2025 was primarily due to strong execution of inventory optimization initiatives and working capital discipline.
Previous wording
Net cash used in investing activities was $32 million and $35 million in the three months ended March 31, 2026 and 2025, respectively, related to capital expenditures. As a percentage of sales, capital expenditures were 3.6% and 4.4% for the three months ended March 31, 2026 and 2025, respectively.
Current wording
Net cash used in investing activities was $53 million and $68 million in the six months ended June 30, 2026 and 2025, respectively, related to timing of capital expenditures. As a percentage of sales, capital expenditures were 3.0% and 4.1% for the six months ended June 30, 2026 and 2025, respectively.
Previous wording
Net cash used in financing activities was $50 million and $117 million in the three months ended March 31, 2026 and 2025, respectively. The decrease is primarily due to borrowings on the Revolving Facility and lower stock repurchases.
Current wording
Net cash used in financing activities was $81 million and $169 million in the six months ended June 30, 2026 and 2025, respectively. The decrease is primarily due to borrowings on the Revolving Facility in order to support regional liquidity needs, as well as lower stock repurchases.
Rearranged current paragraphs (18)
Current report — wording carried from elsewhere
Other operating income, net was de minimis compared to income of $6 million for the three months ended June 30, 2026 and 2025. The change in other operating income, net was primarily driven by a decrease in separation-related benefits. Other operating income, net was comprised of the following:
Current report — wording carried from elsewhere
The following table presents a summary of the Company’s operating results:
Current report — wording carried from elsewhere
Net sales and Cost of sales
Current report — wording carried from elsewhere
Net sales for the six months ended June 30, 2026 totaled $1,818 million, an increase of $132 million, or 8%, compared to the six months ended June 30, 2025. Cost of sales and cost of sales as a percentage of net sales were $1,414 million and 78%, respectively, during the six months ended June 30, 2026, compared to $1,317 million and 78%, respectively, during the six months ended June 30, 2025. The change in net sales and cost of sales for the six months ended June 30, 2026 was primarily driven by the impacts below.
Current report — wording carried from elsewhere
Selling, general and administrative expenses(SG&A)
Current report — wording carried from elsewhere
SG&A for the six months ended June 30, 2026 and 2025 was $243 million as compared to $219 million for the six months ended June 30, 2025. SG&A as a percentage of net sales was 13% for the six months ended June 30, 2026 and 2025. SG&A expenses increased period-over-period, primarily attributable to increased employee costs, including stock-based compensation, as well as foreign currency exchange impacts and professional fees.
Current report — wording carried from elsewhere
Equity in affiliates’ earnings, net of tax
Current report — wording carried from elsewhere
Equity in affiliates’ earnings, net of tax was $9 million and $8 million in the six months ended June 30, 2026 and 2025, respectively. This line item is driven by the results of the Company’s unconsolidated joint venture.
Current report — wording carried from elsewhere
Interest income was $4 million and $8 million in the six months ended June 30, 2026 and 2025, respectively. The interest income is primarily related to interest earned on funds held in money market, local overnight deposits, and short term investments.
Current report — wording carried from elsewhere
For further details, see Note 7, “Income Taxes,” to the Condensed Consolidated Financial Statements for the six months ended June 30, 2026 and 2025.
Current report — wording carried from elsewhere
Net earnings per diluted share and adjusted net earnings per diluted share
Current report — wording carried from elsewhere
The Company’s net earnings per diluted share was $2.01 and $1.76 for the six months ended June 30, 2026 and 2025, respectively. The Company’s adjusted net earnings per diluted share was $2.81 and $2.21 for the six months ended June 30, 2026 and 2025, respectively. The Company defines adjusted net earnings per diluted share, a non-GAAP measure, as net earnings per diluted share adjusted to exclude: (i) the impact of restructuring expense, separation-related costs, merger and acquisition expense, impairment charges and other gains, losses and tax effects and adjustments not reflective of the Company’s ongoing operations; and (ii) acquisition-related intangibles amortization expense because it pertains to non-cash expenses that the Company does not use to evaluate core operating performance. Management believes that adjusted net earnings per diluted share is useful to investors in assessing the Company’s ongoing financial performance, as it provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the Company’s core operating performance.
Current report — wording carried from elsewhere
Results by Reportable Segment for the six months ended June 30, 2026 and 2025
Current report — wording carried from elsewhere
The Company’s business is aggregated into two reportable segments: Fuel Systems and Aftermarket.
Current report — wording carried from elsewhere
Segment Adjusted Operating Income (AOI) is the measure of segment income or loss used by the Company. Segment AOI is comprised of segment operating income adjusted for restructuring, transaction-related costs, acquisition-related intangible asset amortization expense, impairment charges and other items not reflective of ongoing operating income or loss. The Company believes Segment AOI is most reflective of the operational profitability or loss of its reportable segments.
Current report — wording carried from elsewhere
Refer to Note 21, “Reportable Segments and Related Information” to the Condensed Consolidated Financial Statements, for more information.
Current report — wording carried from elsewhere
The following table presents Net sales and Segment AOI for the Company’s reportable segments:
Current report — wording carried from elsewhere
The following table presents the year-over-year change in net sales and Segment AOI for the Company’s reportable segments for the six months ended: