PHINIA Inc. Reports 8% Revenue Decline to $796 Million in Q1 2025

PHINIA Inc. reported its financial results for the first quarter of 2025, revealing a net sales figure of $796 million, a decrease of 8% from $863 million in the same period of 2024. The decline in revenue was attributed to unfavorable volume and mix driven by lower original equipment manufacturer (OEM) sales across all regions, the conclusion of contract manufacturing agreements with its former parent company, and adverse foreign currency impacts, particularly from the Brazilian Real and Euro. The cost of sales for the quarter was $624 million, maintaining a consistent percentage of net sales at 78%, compared to $671 million in the prior year.

The company's operating income for the first quarter of 2025 was $62 million, down from $71 million in the previous year. Net earnings also fell to $26 million, or $0.63 per diluted share, compared to $29 million, or $0.62 per diluted share, in the first quarter of 2024. The decrease in profitability was influenced by increased selling, general, and administrative expenses, which rose to $107 million from $104 million, primarily due to higher employee costs. Other operating expenses decreased significantly to $3 million from $17 million, largely due to reduced transaction-related costs associated with the company's spin-off from BorgWarner.

PHINIA's transition to a standalone company, completed on July 3, 2023, has led to strategic developments, including a focus on enhancing its product offerings and operational efficiencies. The company is committed to expanding its market share in the commercial vehicle sector and increasing its aftermarket sales. As of March 31, 2025, PHINIA reported total assets of $3.748 billion, with total liabilities of $2.211 billion, resulting in total equity of $1.537 billion. The company’s cash and cash equivalents decreased to $373 million from $484 million at the end of 2024, reflecting increased stock repurchases and dividend payments.

In terms of operational metrics, PHINIA's Fuel Systems segment generated $473 million in sales, while the Aftermarket segment contributed $323 million. The Fuel Systems segment's adjusted operating margin was 9.5%, down from 10.4% in the prior year, while the Aftermarket segment's margin decreased to 16.1% from 17.9%. The company reported a total employee headcount of 4,500, reflecting ongoing adjustments as it fully transitions to independent operations.

Looking ahead, PHINIA anticipates challenges in earnings and cash generation for 2025, citing a softening of OEM markets and foreign currency impacts that may outpace operational efficiencies. The company expects light vehicle volumes in key markets to decline by mid-single digits, while commercial vehicle volumes are projected to remain stable. Despite these challenges, PHINIA maintains a positive long-term outlook, focusing on new product development and strategic investments to enhance its competitive position in the market.