PHINIA (NYSE:PHIN) reported second-quarter revenue growth in both its fuel systems and aftermarket businesses, while announcing an agreement to acquire precision-components supplier stoba Group and refining its full-year outlook.
Chief Executive Officer Brady Ericson said the quarter developed “largely as we expected,” citing continued growth across the company’s two operating segments. Net sales rose 5.6% year over year to $940 million. Excluding foreign exchange effects, tariff recoveries and the contribution from SEM, revenue increased 2%.
Segment Results
Fuel Systems sales rose 5% to $584 million during the quarter, with an adjusted operating margin of 11%. The Aftermarket segment recorded sales of $356 million, up 6.6% from a year earlier, and an adjusted operating margin of 17.1%.
Ericson said the company continued to benefit from replacement-cycle fundamentals and positive conditions in commercial vehicles, while navigating geopolitical and trade uncertainty, shipping challenges and regional production variability.
Chief Financial Officer Chris Gropp said foreign exchange created a $21 million headwind to quarterly sales as the Chinese renminbi, euro and Brazilian real strengthened against the U.S. dollar. Volume and mix added $18 million, supported by customer pricing and higher Americas aftermarket sales. SEM, meanwhile, contributed $18 million in revenue.
Net tariff pass-through reduced quarterly revenue by $7 million, primarily reflecting anticipated government tariff refunds that PHINIA expects to pass through to customers that had previously reimbursed the company for portions of the tariff impact.
On profitability, Gropp said net tariff expense and anticipated refunds contributed $11 million to earnings in the quarter. SEM contributed $3 million of adjusted EBITDA, representing a 16.6% margin. Product mix was a $1 million headwind, partially offset by supplier savings and cost-control measures, while other costs increased by about $9 million, largely due to short- and long-term incentive compensation adjustments.
stoba Acquisition Expands Manufacturing and End-Market Exposure
PHINIA entered a definitive agreement to acquire stoba Group, a global technology partner specializing in high-precision components, systems and integrated solutions. The transaction is expected to close in the fourth quarter of 2026, subject to regulatory approvals and customary closing conditions, and will be funded with available liquidity.
stoba operates in four countries and has seven manufacturing sites in the U.K., China, the Czech Republic and Germany. PHINIA expects the acquired business to add about $80 million in annual third-party revenue and approximately $25 million in adjusted EBITDA on a run-rate basis. The company said stoba’s total sales are approximately $200 million, but roughly $120 million represents sales to PHINIA that will be eliminated upon consolidation as intercompany revenue.
Gropp said the purchase price was approximately six times EBITDA and that the transaction is expected to be accretive to PHINIA’s run-rate EBITDA margin by about 40 basis points annually. During the question-and-answer session, Ericson said the business provides specialized manufacturing capabilities, strengthens PHINIA’s supply base and may support longer-term growth and operational synergies.
The acquisition is also expected to expand PHINIA’s presence in off-highway, industrial, aerospace and defense markets. Ericson noted that stoba has an aerospace-and-defense-qualified facility in Germany, along with installed capacity that PHINIA expects to use without significant additional capital investment. stoba also supports semiconductor equipment with high-performance components, creating another diversification opportunity, according to PHINIA.
New Business and Aftermarket Expansion
Ericson highlighted several new fuel-system wins, including a heated-tip multi-point fuel injection system for light passenger vehicles, a 24-volt starter program for a Class 8 commercial vehicle platform, and a complete common-rail system program for agricultural applications.
In the aftermarket business, PHINIA expanded distribution through a Pan-European distributor and added customer acquisitions, branch expansion and distribution penetration across North Africa, Eastern Europe, the Americas, China, Southeast Asia and Oceania. The company introduced more than 2,650 new stock-keeping units globally in the first half and added more than 150,000 cross-references to regional catalogs.
PHINIA also cited product launches including a 500-bar gasoline direct injection system, a fuel-delivery module in India and a next-generation GDI pump.
Cash Flow, Capital Returns and Outlook
PHINIA ended the quarter with $370 million in cash and cash equivalents and approximately $820 million in total liquidity, including available capacity under credit facilities. Its net leverage ratio was 1.3 times, below its target of 1.5 times.
Cash flow from operations increased $34 million year over year to $91 million, while adjusted free cash flow was $74 million. Capital expenditures were 2.3% of sales, below the company’s 4% target.
The company returned $53 million to shareholders in the quarter, including $42 million in share repurchases and $11 million in dividends. Since its July 2023 spinoff through the second quarter of 2026, PHINIA said it has repurchased $534 million of shares and paid $131 million in dividends, for total shareholder returns of $665 million.
For 2026, PHINIA tightened its revenue outlook to a range of $3.57 billion to $3.67 billion, retaining the midpoint of its previous forecast. The company expects mid-single-digit reported sales growth, including foreign exchange, and low-single-digit growth excluding expected foreign exchange effects.
PHINIA now expects adjusted EBITDA of $485 million to $515 million, equating to a margin of 13.5% to 14.1%, and adjusted free cash flow of $210 million to $250 million. The outlook does not include potential effects from the stoba acquisition or future government policy changes, including tariffs or tax reforms.
About PHINIA (NYSE:PHIN)
PHINIA Inc engages in the development, design, and manufacture of integrated components and systems that optimize performance, increase efficiency, and reduce emissions in combustion and hybrid propulsion for commercial and light vehicles, and industrial applications. The company operates through Fuel Systems and Aftermarket segments. The Fuel Systems segment provides advanced fuel injection systems, including pumps, injectors, fuel rail assemblies, and engine control modules; fuel delivery modules; canisters; sensors; and electronic control modules.
