PHINIA Inc. to Report Q1 2025 Earnings: What to Expect

PHINIA Inc. (NYSE: PHIN), a leader in premium fuel systems, electrical systems, and aftermarket solutions, is set to report its first quarter 2025 earnings results on Friday, April 25, 2025. The company, with a strong brand portfolio that includes DELPHI®, DELCO REMY®, and HARTRIDGETM, has been navigating a complex market landscape characterized by shifting demand for combustion engines and the growing importance of alternative fuels. As investors and analysts await the earnings report, several key factors and forecasts provide insights into what to expect.



Market Dynamics and Historical Performance

PHINIA's performance in recent years has been a mix of challenges and opportunities. In 2024, the company reported net sales of $3.403 billion, a slight decrease from the previous year. This decline was primarily driven by lower sales in the fuel systems segment in Europe and China, offset by growth in the aftermarket segment. The gross profit for 2024 was $756 million, with an increase in gross margin due to supplier settlements and cost management. However, net earnings for 2024 were $79 million, down from the previous year's $102 million, due to higher interest expenses and one-time costs associated with the spinoff and asset impairments.

Analyst Forecasts and Market Trends

Analysts are optimistic about PHINIA's earnings growth. The average 1-year forecast for earnings per share (EPS) is $4.10, representing a 127.96% increase. For the next two years, the forecasts are $4.90 (172.22% increase) and $5.73 (218.33% increase), respectively. This indicates a strong expectation for earnings growth, outpacing both the US Auto Parts industry average of 25.56% and the US market average of 24.16%.



However, revenue growth forecasts are more modest. The average 1-year revenue forecast is $3.4 billion, a slight decrease of 0.91%. For the next two years, the forecasts are $3.5 billion (1.81% increase) and $3.5 billion (3.47% increase), respectively. This suggests that while earnings are expected to grow significantly, revenue growth may lag behind industry and market trends.

Key Factors Driving Changes

Several key factors are likely to influence PHINIA's Q1 2025 earnings results:

1. Geographical Sales Performance: Lower sales in the fuel systems segment in Europe and China contributed to the overall revenue decline in 2024. Regional economic conditions and market demand will continue to play a significant role in PHINIA's financial performance.

2. Aftermarket Segment Growth: The aftermarket segment showed growth in 2024, indicating that PHINIA's diversified product offerings and aftermarket solutions are resilient and can mitigate some of the challenges faced in the OEM segment.

3. Cost Management and Supplier Settlements: Despite the overall sales decline, PHINIA managed to increase its gross margin through cost management and supplier settlements. This highlights the company's efforts to optimize operations and control expenses.

4. Interest Expenses and One-Time Costs: Higher interest expenses and one-time costs associated with the spinoff and asset impairments negatively impacted net earnings in 2024. This suggests that financial restructuring and strategic investments have short-term costs that affect profitability.

Investor Sentiment and Analyst Recommendations

Investor sentiment appears cautiously optimistic. Based on the consensus recommendation from 5 brokerage firms, PHINIA Inc.'s average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell. Analysts are generally bullish on PHINIA's stock, with a "Strong Buy" rating from one analyst and a "Buy" rating from two analysts. However, the Zen Rating quant model rates PHIN as a "Hold," suggesting a more conservative approach.

Conclusion

PHINIA Inc.'s Q1 2025 earnings report will provide valuable insights into the company's performance in a rapidly evolving market. While analysts are optimistic about earnings growth, revenue growth is expected to be modest. Key factors such as geographical sales performance, aftermarket segment growth, cost management, and financial restructuring costs will play crucial roles in determining PHINIA's financial performance for the quarter. Investors and analysts will be closely watching these factors as they assess the company's prospects in the coming quarters.