Phinia Inc. · NYSE:PHIN
Phinia — Deutsche Bank 31st Annual Leveraged Finance Conference 2023
25 slides from Phinia's conference presentation, Oct 4, 2023
Slide 1: DB 31st Annual Leveraged Finance Conference
DB 31st Annual Leveraged Finance Conference Brady Ericson Chief Executive Officer October 4, 2023 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements that are based on management’s current outlook, expectations, estimates and projections. Words such as “anticipates,” “believes,” “continues,” “could,” “designed,” “effect,” “estimates,” “evaluates,” “expects,” “forecas
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains information about PHINIA’s financial results that is not presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Such non-GAAP financial measures are reconciled to their most directly comparable GAAP
Slide 4: Empowering the Transition to Carbon Neutrality
Empowering the Transition to Carbon Neutrality Market-leading systems and components that drive efficiency today, while powering towards a carbon-free tomorrow Product Stable Growth Financially Total Shareholder Leadership Strategy Disciplined Returns Technology expert and partner Pursue attractive
Slide 5: PHINIA's Diverse Markets and Customer Base
PHINIA’s Diverse Markets and Customer Base… Diverse, Resilient End Markets Exposure – Embedded Relationship Globally Diverse Footprint Majority CV & OES / IAM* with Global OEMs PACCAR HYUNDAI VOLVO TRUCKS 20% 24% APAC CV & Other OE CATERPILLAR VOLKSWAGEN 41% 44% Americas LV OE DAIMLER TRUCKS 32% 39%
Slide 6: Answers to Sectors' Most Pressing Needs
Answers to Sectors’ Most Pressing Needs Reliable Supplier Partner Solutions that Drive Efficiency Pathway to Carbon Neutrality Global reach with scale – Innovative technology that Leading alternative engineering and manufacturing drives value for end customers fuel technologies Full system integrati
Slide 7: Delivering Innovation to Address OEMs' Needs
Delivering Innovation to Address OEMs’ Needs Current Systems Future Systems Alternative Fuels CV Current technology meeting the world’s most Next-gen technology enhances fuel efficiency, reduces stringent emission standards particulates to meet stringent Euro 7 emission standards 350 bar Direct Inje
Slide 8: Hydrogen Injection Leverages GDi Technology
Hydrogen Injection Leverages GDi Technology… Injector Injector Shared core capabilities • Hydrogen Injector based on GDi injector construct Hydrogen • Leverages design expertise, process GDi knowledge and equipment assets • Leverages ECU and software knowledge ECU / ECU base PDCU • Benefits design p
Slide 9: And is Right-to-Win Growth Category for PHINIA
Initiations …And is Right-to-Win Growth Category for PHINIA Hydrogen Tailwinds Boost Appeal as BEV Alternative 50 Partners / Projects Engaged Last Year “Premiere: Volvo Trucks tests hydrogen-powered Since 2021 electric trucks on public roads” - May 8, 2023 50 Opportunities “Honda teaming up with GM
Slide 10: Growth Opportunity from End Market Expansion
Growth Opportunity from End Market Expansion Existing Applications Existing Areas Industrial Applications Opportunity unaffected by BEV transition Linear Power Generation Leverages core capabilities and skills Benefit from strong demand for fuel system performance Heavy-Duty Stationary Power Aerospa
Slide 11: Holistic Approach to Winning in the Aftermarket
Holistic Approach to Winning in the Aftermarket Gasoline Fuel Chassis & Maintenance Systems Dedicated Solutions Fuel delivery modules Services & Braking | Steering & Suspension Fuel pumps | GDI injection Systems Workshop Solutions CV Starters & Alternators PFI Injections Diagnostics Test equipment T
Slide 12: Large Aftermarket Opportunity with Sustained Tailwinds
Large Aftermarket Opportunity with Sustained Tailwinds $36bn Core Offered Market Market Drivers Existing core products in existing geographies Growing number of vehicles in operation $51bn Increasing vehicle age and miles travelled Saleable Market (SAM) Existing products in all geographies Saleable
Slide 13: Well-Defined Growth Opportunities in Aftermarket
Well-Defined Growth Opportunities in Aftermarket Market Expansion Extend Product Offer Acquisitions Sell existing programs in new Remanufacture competitor Bolt-on acquisitions as market geographies products consolidates Grow market share by Leverage global sourcing Vertical integration expanding cov
Slide 14: Remanufacturing: Sustainability in our DNA
Remanufacturing: Sustainability in our DNA Sustainability Global Capability Growth Opportunity ~900 remanufactured SKUs 5 Remanufacturing locations ~ 10% of Aftermarket revenue in offer from remanufactured products Remanufactured ~10,000 mt Invested in Capacity to Diesel Fuel Injection of material s
Slide 15: Expect Strong Financials for 2025 and Beyond
…Expect Strong Financials for 2025 and Beyond Appropriate Strong Margins Leverage (1) $3.7bn 14-15% >90% ~1x Revenue Adj. EBITDA Margin(2) Cash Flow Net Leverage Conversion(3) Global Scale Highly Cash with Growth Generative (1) Does not include $95-100mm of Contract Manufacturing Revenue to BorgWarn
Slide 16: Strategic Focus on Growing CV & OES / IAM
Strategic Focus on Growing CV & OES / IAM 2022 2030 Target 24% CV and Other >35% <30% OE LV 44% CV and Other LV OE 32% >35% OES / IAM OES / IAM 56% CV & OES / IAM >70% CV & OES / IAM These figures exclude contract manufacturing revenue OES – Original equipment suppliers 16 IAM – Independent Aftermar
Slide 17: Historical Financial Performance
Historical Financial Performance Revenue ($mm) Commentary $3,227 $3,348 $3,445 $97 $1,218 $1,284 $1,284 YoY Revenue Growth $2,233 $2,293 $2,293 Fuel Systems growth driven by higher production and customer pricing ($224) ($229) ($229) 2021 2022 PF 2022 Aftermarket growth driven by higher demand and i
Slide 18: High-Return Story with Modest Spend Intensity
High-Return Story with Modest Spend Intensity Historically Low Capex Intensity… …Combined with Incremental R&D Leverage Capex as % of Revenue R&D as % of Revenue ~4.0% 3.9% 3.0% ~3.0% Average (‘21-22) Normalized Average (‘21-22) Normalized Leveraging Financial Capacity and Technological Expertise fo
Slide 19: Debt and Liquidity at Spin
DEBT AND LIQUIDITY AT SPIN Credit Agreement – 5-Year Maturity (3) $mm $500M Revolving Credit Facility SOFR + 250 b.p. 75 Term Loan A SOFR + 250 b.p. 300 Term Loan B SOFR + 400 b.p. 425 Secured Debt 800 Other Debt 24 Total Debt 824 Cash(2) ~(300) Net Debt 524 Total Debt / Adj. EBITDA(1) (TTM) 1.6x Co
Slide 20: Empowering the Transition to Carbon Neutrality
Empowering the Transition to Carbon Neutrality Market-leading systems and components that drive efficiency today, while powering towards a carbon-free tomorrow Product Stable Growth Financially Total Shareholder Leadership Strategy Disciplined Returns Technology expert and partner Pursue attractive
Slide 21: Appendix
21 —>PHINIA APPENDIX
Slide 22: Adjusted EBITDA & Margin Reconciliation to US GAAP
ADJUSTED EBITDA & MARGIN RECONCILIATION TO US GAAP The Company defines adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) as net earnings less interest, taxes, depreciation and amortization, adjusted to exclude the impact of restructuring expense, merger, acquisition an
Slide 23: Adjusted Sales Reconciliation to US GAAP
ADJUSTED SALES RECONCILIATION TO US GAAP The Company defines adjusted sales as sales adjusted to exclude certain agreements with BorgWarner that were entered into in connection with the Spin-Off. Full Year 2023 Guidance Low High Sales $3,495 $3,600 Post Spin-Off agreement adjustment 45 50 Adjusted s
Slide 24: Adjusted Net Earnings Reconciliation
Adjusted Net • Adjusted Earnings Net Reconciliation Earnings Reconciliation ($mm) 2021 2022 PF 2022 Key Adjustments Net Earnings (Loss) Attributable $152 $262 $192 1 to PHINIA (Per Form 10) Add-back of non-recurring M&A expenses primarily related to professional fees associated with the Spin-Off and
Slide 25: Free Cash Flow Reconciliation
• Free Free Cash Cash Flow Flow Reconciliation Reconciliation ($mm) 2021 2022 Net Cash (Used In) Provided By Operating Activities $147 $303 (-) Capital Expenditures, Including Tooling Outlays 146 107 Free Cash Flow $1 $196 25 25
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