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What changed in PHINIA INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of PHINIA INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+336 added−330 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-13)

Top changes in PHINIA INC.'s 2025 10-K

336 paragraphs added · 330 removed · 258 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

44 edited+18 added−10 removed23 unchanged
Biggest changeAnderson (55) Vice President and Chief Technology Officer (July 2023) • Vice President and General Manager, Fuel Systems (Europe, Middle East, Africa), BorgWarner (2021-July 2023) • Vice President and Managing Director, Diesel Fuel Injection Systems, BorgWarner (2020-2021) • Vice President and Managing Director, Diesel Fuel Injection Systems, Delphi Technologies (2019-2021) Robert Boyle (45) Vice President, General Counsel and Secretary (July 2023) • Vice President and General Counsel (Europe), BorgWarner (2020-July 2023) • Vice President, Corporate and Securities, and Assistant Secretary, Delphi Technologies (2018-2020) Michael Coetzee (58) Vice President and General Manager, Fuel Systems Americas (July 2023) • Vice President and General Manager, Morse Systems, Americas, BorgWarner (2020-July 2023) • Vice President and General Manager, Transmission Systems, Americas, BorgWarner (2016-2020) Alisa Di Beasi (50) Vice President and Chief Human Resource Officer (July 2023) • Vice President, Global Human Resources, Morse Systems, BorgWarner (2020-July 2023) • Global Vice President, Human Resources, Low Voltage, Smart Buildings and Smart Charging, ABB AG (power and automation technology manufacturer) (2016-2019) Sebastian Dori (44) Vice President and Chief Purchasing Officer (July 2023) • Vice President, Global Supply Management, Fuel Systems, BorgWarner (2021-July 2023) • Director, Global Supply Chain Management, Morse Systems, BorgWarner (2020-2021) • Supply Chain Director, Europe and South America, Turbo Systems, BorgWarner (2017-2020) Christopher Gustanski (51) Vice President, Operational Excellence (July 2023) • Vice President Manufacturing Strategy and Quality, BorgWarner (2020-July 2023) • Vice President Manufacturing Engineering, Powertrain Products and Corporate Manufacturing Engineering, Lean, and Footprint Planning, Delphi Technologies (2019-2020) Neil Fryer (63) Vice President and General Manager, Global Aftermarket (July 2023) • Vice President and General Manager, Global Aftermarket, BorgWarner (2022-July 2023) • Vice President Global Marketing, Product and Strategic Planning, Aftermarket, BorgWarner (2020-2022) • Vice President Global Marketing, Product and Strategic Planning Aftermarket, Delphi Technologies (2017-2020) John Lipinski (57) Vice President and General Manager, Fuel Systems Europe (July 2023) • Vice President, Global Manufacturing Engineering, PowerDrive Systems, BorgWarner (2022-July 2023) • Senior Director Global Manufacturing Engineering and Operations, PowerDrive Systems, BorgWarner (2020-2022) • Global Operations Senior Director, Delphi Technologies (2019-2020) Matthew Logar (49) Vice President and Chief Information Officer (July 2023) • Chief Information Officer, Gentherm Incorporated (thermal management technologies company) (2020-July 2023) • Executive Director, Information Technology, Gentherm (2019-2020) Samantha M.
Biggest changeAnderson (56) Vice President and Chief Technology Officer (July 2023) • Vice President and General Manager, Fuel Systems (Europe, Middle East, Africa), BorgWarner (2021-July 2023) • Vice President and Managing Director, Diesel Fuel Injection Systems, BorgWarner (2020-2021) Robert Boyle (46) Senior Vice President, General Counsel and Secretary (January 2026) • Vice President, General Counsel and Secretary (July 2023-January 2026) • Vice President and General Counsel (Europe), BorgWarner (2020-July 2023) Michael Coetzee (59) Vice President and General Manager, Fuel Systems Americas (July 2023) • Vice President and General Manager, Morse Systems, Americas, BorgWarner (2020-July 2023) • Vice President and General Manager, Transmission Systems, Americas, BorgWarner (2016-2020) Alisa Di Beasi (51) Senior Vice President and Chief Human Resource Officer (January 2026) • Vice President and Chief Human Resource Officer (July 2023-January 2026) • Vice President, Global Human Resources, Morse Systems, BorgWarner (2020-July 2023) Sebastian Dori (45) Vice President and Chief Purchasing Officer (July 2023) • Vice President, Global Supply Management, Fuel Systems, BorgWarner (2021-July 2023) • Director, Global Supply Chain Management, Morse Systems, BorgWarner (2020-2021) Christopher Gustanski (52) Vice President, Operational Excellence (July 2023) • Vice President Manufacturing Strategy and Quality, BorgWarner (2020-July 2023) • Vice President Manufacturing Engineering, Powertrain Products and Corporate Manufacturing Engineering, Lean, and Footprint Planning, Delphi Technologies (2019-2020) Neil Fryer (64) Vice President and General Manager, Global Aftermarket (July 2023) • Vice President and General Manager, Global Aftermarket, BorgWarner (2022-July 2023) • Vice President Global Marketing, Product and Strategic Planning, Aftermarket, BorgWarner (2020-2022) John Lipinski (58) Vice President and General Manager, Fuel Systems Europe (July 2023) • Vice President, Global Manufacturing Engineering, PowerDrive Systems, BorgWarner (2022-July 2023) • Senior Director Global Manufacturing Engineering and Operations, PowerDrive Systems, BorgWarner (2020-2022) • Global Operations Senior Director, Delphi Technologies (2019-2020) Matthew Logar (50) Senior Vice President and Chief Information Officer (January 2026) • Vice President and Chief Information Officer (July 2023-January 2026) • Chief Information Officer, Gentherm Incorporated (thermal management technologies company) (2020-July 2023) Samantha M.
For many of our products, our competitors include suppliers in parts of the world that enjoy economic advantages such as lower labor costs, lower health care costs, lower tax rates and, in some cases, export subsidies and/or raw materials subsidies.
For many of our products, our competitors include suppliers in parts of the world that enjoy economic advantages such as lower labor costs, lower health care costs, lower tax rates and, in some cases, export or raw materials subsidies.
We are a global supplier to most major original equipment manufacturers (OEMs) seeking to meet and exceed increasingly stringent global regulatory requirements and satisfy consumer demands for an enhanced user experience. Additionally, we offer a wide range of original equipment service (OES) solutions and remanufactured products as well as an expanded range of products for the independent (non-OEM) aftermarket.
We are a global supplier to most major original equipment manufacturers (OEMs) seeking to meet and exceed increasingly stringent global regulatory requirements and satisfy consumer demands for an enhanced user experience. Additionally, we offer a wide range of original equipment service (OES) solutions and remanufactured products as well as an expanded range of products for the independent (non-OEM) aftermarket (IAM).
Also, see Item 1A, “Risk Factors.” Available Information Through the Company’s investor relations website (investors.phinia.com), the Company makes available, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, and other filings with the SEC as soon as reasonably practicable after they are filed or furnished.
Also, see Item 1A, “Risk Factors.” 10 Table of Contents Available Information Through the Company’s investor relations website (investors.phinia.com), the Company makes available, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, and other filings with the SEC as soon as reasonably practicable after they are filed or furnished.
The Company is a leader in the development, design and manufacture of integrated components and systems that are designed to optimize performance, increase efficiency and reduce emissions in combustion and hybrid propulsion for commercial vehicles and industrial applications (medium-duty and heavy-duty trucks, buses and other off-highway construction, marine, agricultural and industrial applications), light commercial vehicles (vans and trucks) and light passenger vehicles (passenger cars, mini-vans, cross-overs and sport-utility vehicles).
The Company is a leader in the development, design and manufacture of integrated components and systems that are designed to optimize performance, increase efficiency and reduce emissions in combustion and hybrid propulsion for commercial vehicles and industrial applications (medium-duty and heavy-duty trucks, buses and other off-highway construction, marine, agricultural and aerospace and defense), light commercial vehicles (vans and trucks) and light passenger vehicles (passenger cars, mini-vans, cross-overs and sport-utility vehicles).
By working closely with OEMs and anticipating their future product needs, our R&D employees conceive, design, develop, test and validate new proprietary components and systems. R&D employees also work to improve current products and production processes. We believe our commitment to R&D will allow us to continue to obtain new orders from our OEM customers.
By working closely with OEMs and other customers and anticipating their future product needs, our R&D employees conceive, design, develop, test and validate new proprietary components and systems. R&D employees also work to improve current products and production processes. We believe our commitment to R&D will allow us to continue to obtain new orders from our customers.
Name (Age) Present Position (Effective Date) Positions Held During the Past Five Years (Effective Date) Brady D. Ericson (53) President and Chief Executive Officer (July 2023) • President and General Manager, Fuel Systems and Aftermarket BorgWarner (2022-July 2023) • President and General Manager, Morse Systems, BorgWarner (2019-2022) Chris P.
Name (Age) Present Position (Effective Date) Positions Held During the Past Five Years (Effective Date) Brady D. Ericson (54) President and Chief Executive Officer (July 2023) • President and General Manager, Fuel Systems and Aftermarket BorgWarner (2022-July 2023) • President and General Manager, Morse Systems, BorgWarner (2019-2022) Chris P.
Upon securing a new order, account managers participate in product launch team activities and serve as a key interface with customers. In addition, sales and marketing employees of our reportable segments often work together to explore cross-development opportunities where appropriate. 6 Table of Contents Seasonality Our operations are directly related to the commercial vehicle and light vehicle industries.
Upon securing a new order, account managers participate in product launch team activities and serve as a key interface with customers. In addition, sales and marketing employees of our reportable segments often work together to explore cross-development opportunities where appropriate. Seasonality Our operations are directly related to the commercial vehicle and light vehicle industries.
Financial Information About Reportable Segments Refer to Note 22, “Reportable Segments and Related Information,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for financial information about the Company's reportable segments. Joint Venture As of December 31, 2024, the Company had one unconsolidated joint venture in which it exercises significant influence but has a less-than-100% ownership interest.
Financial Information About Reportable Segments Refer to Note 24, “Reportable Segments and Related Information,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for financial information about the Company's reportable segments. Joint Venture As of December 31, 2025, the Company had one unconsolidated joint venture in which it exercises significant influence but has a less-than-100% ownership interest.
During the year ended December 31, 2024, approximately 37% of the Company’s net sales were generated in the United States, and 63% were generated outside the United States. Refer to Note 22, “Reportable Segments and Related Information,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for additional financial information about geographic areas.
During the year ended December 31, 2025, approximately 37% of the Company’s net sales were generated in the United States, and 63% were generated outside the United States. Refer to Note 24, “Reportable Segments and Related Information,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for additional financial information about geographic areas.
Dissemination of Company Information The Company intends to make future announcements regarding Company developments and financial performance through its websites, www.phinia.com and investors.phinia.com, as well as through press releases, filings with the SEC, conference calls and webcasts. 10 Table of Contents Information About Our Executive Officers Set forth below are the names, ages, positions and certain other information concerning the Company’s executive officers and officers within the meaning of Rule 16a-1(f) of the Exchange Act as of February 13, 2025.
Dissemination of Company Information The Company intends to make future announcements regarding Company developments and financial performance through its websites, www.phinia.com and investors.phinia.com, as well as through press releases, filings with the SEC, conference calls and webcasts. 11 Table of Contents Information About Our Executive Officers Set forth below are the names, ages, positions and certain other information concerning the Company’s executive officers and officers within the meaning of Rule 16a-1(f) of the Exchange Act as of February 12, 2026.
Our highly engineered fuel injection systems portfolio includes pumps, injectors, fuel rail assemblies, engine control modules, and complete systems, including software and calibration services, that reduce emissions and improve fuel economy for traditional and hybrid applications. 5 Table of Contents Aftermarket The Aftermarket segment sells products to independent aftermarket customers and OES customers.
Our highly engineered fuel injection systems portfolio includes pumps, injectors, fuel rail assemblies, engine control modules, and complete systems, including software and calibration services, that reduce emissions and improve fuel economy for traditional and hybrid applications. Aftermarket The Aftermarket segment sells products to independent aftermarket customers.
New regulations and changes to existing regulations are managed in 9 Table of Contents collaboration with our OEM customers and implemented through our global systems and procedures designed to ensure compliance with existing laws and regulations. We demonstrate material content compliance through the International Material Data System (IMDS), which is the vehicle industry material data system.
New regulations and changes to existing regulations are managed in collaboration with our OEM and other customers and implemented through our global systems and procedures designed to ensure compliance with existing laws and regulations. We demonstrate material content compliance through the International Material Data System (IMDS), which is the vehicle industry material data system.
Government Regulations We are subject to extensive and varied laws and regulations in the jurisdictions in which we operate, including those relating to anti‑corruption and trade, anti-money laundering, environmental matters, import and export compliance, antitrust, data security and privacy, employment, public health and safety, intellectual property, transportation, zoning, and fire codes.
Government Regulations We are subject to extensive and varied laws and regulations in the jurisdictions in which we operate, including those relating to: anti‑corruption and trade; anti-money laundering; import and export compliance; antitrust; corporate sustainability, including environmental, health and safety and human rights; data security and privacy; employment; intellectual property; transportation; zoning; and fire codes.
Refer to Note 14, “Financial Instruments,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for information related to the Company’s hedging activities. Prices for commodities remain volatile, and since the beginning of 2021, the Company has experienced price increases for energy and base metals (e.g., steel, aluminum and copper) while slightly decreasing in 2024.
Refer to Note 16, “Financial Instruments,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for information related to the Company’s hedging activities. Prices for commodities remain volatile , and since 2024 the Company has experienced price increases for energy, gases and base metals (e.g., steel, aluminum and copper).
We are dedicated to continually improving health and safety performance through education, managing and mitigating risk and building a culture where safety comes first and is embedded as a value. We maintain safety management systems at all of our manufacturing facilities.
We are dedicated to continually improving health and safety performance through education, managing and mitigating risk and maintaining a culture where safety comes first and is embedded in our core values. We maintain safety management systems at all of our manufacturing facilities.
We believe the broad array of skills, backgrounds, experiences, and industry knowledge of our talented employees advance our efforts in cultivating an inclusive culture, driving operational excellence, executing our business strategy and providing innovative products and solutions designed to optimize performance, increase efficiency and solve our customers’ biggest challenges.
We believe the skills, backgrounds, experiences, and industry knowledge of our talented employees are critical to our success and advance our efforts in cultivating an inclusive culture, driving operational excellence, executing our business strategy and providing innovative products and solutions designed to solve our customers’ biggest challenges.
We currently hold over 2,500 active pending applications and issued patents worldwide, and numerous pending and registered trademarks worldwide. Many of our trademarks are well-known in the markets in which we operate, and are key differentiators in particular for our aftermarket business.
We currently hold over 2,750 active pending applications and issued patents worldwide, and over 1,900 pending and registered trademarks worldwide. Many of our trademarks are well-known in the markets in which we 7 Table of Contents operate, and are key differentiators in particular for our aftermarket business.
Its product portfolio includes a wide range of products as well as maintenance, test equipment and vehicle diagnostics solutions. The Aftermarket segment also includes sales of starters and alternators to OEMs.
Its product portfolio includes a wide range of products as well as maintenance, test equipment and vehicle diagnostics solutions. Additionally, we offer a diverse portfolio of original equipment service solutions and remanufactured products. The Aftermarket segment also includes sales of starters and alternators to OEMs.
Year Ended December 31, (in millions) 2024 2023 2022 Gross R&D costs $ 209 $ 188 $ 200 Customer reimbursements (97) (80) (96) Net R&D costs $ 112 $ 108 $ 104 Net R&D costs as a percentage of net sales were 3.3%, 3.1% and 3.1% for the years ended December 31, 2024, 2023 and 2022, respectively.
Year Ended December 31, (in millions) 2025 2024 2023 Gross R&D costs $ 190 $ 209 $ 188 Customer reimbursements (85) (97) (80) Net R&D costs $ 105 $ 112 $ 108 Net R&D costs as a percentage of net sales were 3.0% , 3.3% and 3.1% for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company typically ships its products directly from its plants to the OEMs. Sales and Marketing The Fuel Systems and Aftermarket segments each have their own sales function. Account managers for each of our businesses are assigned to serve specific customers for one or more of the businesses’ products.
Sales and Marketing The Fuel Systems and Aftermarket segments each have their own sales function. Account managers for each of our businesses are assigned to serve specific customers for one or more of the businesses’ products.
Gropp (60) Vice President and Chief Financial Officer (July 2023) • Vice President of Finance, Fuel Systems and Aftermarket, BorgWarner (2020-July 2023) • Vice President of Finance, Transmission Systems, BorgWarner (2014-2020) Pedro Abreu (47) Vice President and Chief Strategy Officer (July 2024) • Vice President and General Manager, Fuel Systems Asia Pacific (July 2023 - July 2024) • Vice President and General Manager Asia, Fuel Systems, BorgWarner (2021-July 2023) • Plant Manager Tulle, France, BorgWarner (2019-2021) Todd L.
Gropp (61) Senior Vice President and Chief Financial Officer (January 2026) • Vice President and Chief Financial Officer (July 2023-January 2026) • Vice President of Finance, Fuel Systems and Aftermarket, BorgWarner (2020-July 2023) Pedro Abreu (48) Vice President and Chief Strategy Officer (July 2024) • Vice President and General Manager, Fuel Systems Asia Pacific (July 2023 - July 2024) • Vice President and General Manager Asia, Fuel Systems, BorgWarner (2021-July 2023) • Plant Manager Tulle, France, BorgWarner (2019-2021) Todd L.
Our global procurement organization works to accelerate cost reductions, purchase from best-cost regions, optimize the supply base, mitigate risk, and collaborate on our buying activities. In addition, we use long-term contracts, cost sharing arrangements, design changes, customer buy programs, and limited financial instruments to help control costs wherever beneficial. The Company intends to use similar measures in 2025 and beyond.
Our global procurement organization works to accelerate cost reductions, purchase from best-cost regions, optimize the supply base, and mitigate risk, including through near shoring and dual sourcing strategies. In addition, we use long-term contracts, cost sharing arrangements, design changes, and limited financial instruments to help control costs wherever beneficial. The Company intends to use similar measures in 2026 and beyond.
Also, see Item 1A, “Risk Factors.” 7 Table of Contents Human Capital Management Our ability to attract, retain and develop a highly skilled workforce globally is critical to our sustained success and the growth of our business.
Also, see Item 1A, “Risk Factors.” Human Capital Management Our ability to attract, engage, retain and develop a highly skilled workforce globally is critical to our long-term success and growth.
Pombier (43) Vice President and Controller (July 2023) • Assistant Controller, BorgWarner (2020-July 2023) • Director, External Reporting, BorgWarner (2019-2020) Hank Yang (50) Vice President and General Manager, Fuel Systems Asia Pacific (July 2024) • Country Director (China) and General Manager Fuel Systems (China) (July 2023-July 2024) • General Manager Fuel Systems (China), BorgWarner (2021-July 2023) • Managing Director, Powertrain System (China), Gnutti-Carlo (2018-2020) 11 Table of Contents
Pombier (44) Vice President and Controller (July 2023) • Assistant Controller, BorgWarner (2020-July 2023) • Director, External Reporting, BorgWarner (2019-2020) Hongyong (Hank) Yang (51) Vice President and General Manager, Fuel Systems Asia Pacific (July 2024) • Country Director (China) and General Manager Fuel Systems (China) (July 2023-July 2024) • General Manager Fuel Systems (China), BorgWarner (2021-July 2023) 12 Table of Contents
Competition We compete globally with a number of other manufacturers and distributors that produce and sell similar products. Many of these competitors are larger, have more diverse product portfolios and have greater resources than us. Technological innovation, application engineering development, quality, price, delivery and program launch support are the primary methods of competition.
Competition We compete globally with a number of other manufacturers and distributors that produce and sell similar products. Many of these competitors are larger, have more diverse product portfolios and have greater resources than us.
Sales to the Company’s top five customers represented 40% of sales for the year ended December 31, 2024. The Company’s products are generally sold directly to OEMs, substantially pursuant to negotiated annual contracts, long-term supply agreements or terms and conditions as may be modified by the parties. Deliveries are subject to periodic authorizations based upon OEM production schedules.
Certain of the Company’s products are generally sold directly to OEMs, substantially pursuant to negotiated annual contracts, long-term supply agreements or terms and conditions as may be modified by the parties. Deliveries are subject to periodic authorizations based upon OEM production schedules. The Company typically ships its products directly from its plants to the OEMs.
Net sales by reportable segment were as follows: Year Ended December 31, (in millions) 2024 2023 2022 Fuel Systems $ 2,264 $ 2,407 $ 2,293 Aftermarket 1,393 1,329 1,284 Inter-segment eliminations (254) (236) (229) Net sales $ 3,403 $ 3,500 $ 3,348 The sales information presented above does not include the sales by the Company’s unconsolidated joint venture (see sub-heading “Joint Venture” below).
Net sales by reportable segment were as follows: Year Ended December 31, (in millions) 2025 2024 2023 Fuel Systems $ 2,320 $ 2,275 $ 2,417 Aftermarket 1,306 1,282 1,231 Inter-segment eliminations (143) (154) (148) Net sales $ 3,483 $ 3,403 $ 3,500 5 Table of Contents The sales information presented above does not include the sales by the Company’s unconsolidated joint venture (see sub-heading “Joint Venture” below).
Americas 5,600 Asia 1,600 Europe 5,500 Total Employees 12,700 Salaried 4,800 Hourly 7,900 Total Employees 12,700 We advance our human capital management strategy through programs and initiatives focused on inclusion, total rewards, culture and engagement, learning and development, and health and safety. Inclusion. Humility, inclusivity, integrity and accountability are the Company’s people-focused core values.
Americas 5,500 Asia 1,700 Europe 5,300 Total Employees 12,500 Salaried 4,900 Hourly 7,600 Total Employees 12,500 We advance our people strategy and empower and support our employees through talent and development programs, our total rewards program, health and safety initiatives, our inclusion strategy and community engagement efforts. Learning, Development and Engagement .
Our Code of Ethical Conduct outlines our expectations for employees to act ethically and responsibly and sets the tone for employee interactions with each other and external stakeholders to create a respectful, inclusive and productive business environment. We seek to reinforce our employees’ understanding of the Code by requiring training for new hires and refresher training for other employees.
Our Code of Ethical Conduct (the Code) outlines the standards that we hold each other and ourselves accountable to, defining the behaviors and actions expected for employees to act ethically, honestly and responsibly. The Code sets the tone for employee interactions with each other and external stakeholders to create a respectful and productive business environment.
Our manufacturing locations that supply directly to OEM customers are certified to the ISO 45001:2018 Occupational health and safety management standard. We engage employees across different roles and geographies through ongoing workplace safety training and prevention initiatives, best practice sharing, safety meetings, and recognition programs.
Our manufacturing locations that supply directly to OEM customers are certified to the ISO 45001:2018, 14001 and IATF 16949/ISO 9001 standards, with the exception of one facility that was acquired by the Company during 2025 in connection with the SEM acquisition. 9 Table of Contents We engage employees across different roles and geographies through ongoing workplace safety training and prevention initiatives, best practice sharing, safety meetings and recognition programs.
In addition, many global economies are experiencing elevated levels of inflation more generally, which is driving an increase in other input costs. As a result, the Company has experienced, and is continuing to experience, higher costs. For 2025, the Company believes there will be lower levels of continued inflationary pressures in certain raw materials, labor and energy.
In addition, many global economies are experiencing elevated levels of trade restrictions, which is driving an increase in other input costs. As a result, the Company has experienced, and expects to continue to experience, higher costs.
Product Lines and Customers During the year ended December 31, 2024, approximately 34% of the Company’s net sales were for independent aftermarket customers and OES, approximately 27% were for light passenger vehicle applications; approximately 20% were for commercial vehicle and industrial applications; approximately 18% were for light commercial vehicle applications, and 1% for other markets.
Product Lines and Customers During the year ended December 31, 2025, approximately 35% of the Company’s net sales were for Service (OES and IAM), approximately 25% were for light passenger vehicle applications, approximately 19% were for light commercial vehicle applications, approximately 15% were for medium and heavy duty commercial vehicle applications, and 6% for off-highway, industrial and other markets.
Our formal performance management system enables managers and employees to set goals that align to our strategy and core values, provide formal feedback throughout the year, and identify professional development goals and opportunities to assist employees in reaching their full potential. We also offer employees the opportunity to participate in traditional and reverse mentoring programs.
Our formal performance management process, which leverages our human capital management system, enables managers and employees to set goals aligned with our business strategy and core values, provide ongoing feedback and identify development opportunities to help employees reach their full potential. We also offer 8 Table of Contents traditional and reverse mentoring programs.
The Company’s worldwide net sales to General Motors Company during the years ended December 31, 2024, 2023, and 2022 were 17%, 16% , and 12%, respectively. No other single customer accounted for more than 10% of the Company’s consolidated net sales in any of the years presented.
No other single customer accounted for more than 10% of the Company’s consolidated net sales in any of the years presented. Sales to the Company’s top five customers represented 37% of sales for the year ended December 31, 2025.
All full- and part-time employees are eligible to participate in our retirement plans, family-friendly leave programs, and flexible work policies, unless precluded by collective bargaining agreements or national statutory plans.
All full- and part-time employees are eligible to participate in our retirement plans and family-friendly leave programs, unless precluded by collective bargaining agreements or national statutory plans. Our compensation infrastructure for salaried employees provides a globally consistent framework, with appropriate flexibility and country-specific salary structures informed by comprehensive market compensation surveys, business needs and other data.
These initiatives and programs aim to facilitate engagement, share successes and focus employees on continually improving the safety of our work environments and fostering safe and healthy practices. Raw Materials We use a variety of raw materials in the production of our products including aluminum, copper, nickel, plastic resins, steel, certain alloy elements, and semiconductor chips.
We focus on three core pillars of community engagement – Education, Clean World, and Community Service – in reinforcing our commitment to leading responsibly and supporting our communities. Raw Materials We use a variety of raw materials in the production of our products including aluminum, copper, nickel, plastic resins, steel, certain alloy elements, and semiconductor chips.
This belief is core to our human capital management strategy, which is focused on creating an inclusive and performance-based environment that fosters learning and development and empowers our people to deliver business results while supporting our Company values and vision for powering a better tomorrow.
Our people strategy framework focuses on developing and empowering our people to deliver business results through our PHINIA core values. Through this framework, we enable an inclusive, performance-based environment that fosters learning and skills development, while providing programs, processes and resources that support our people in delivering business value and advancing our vision of powering a better tomorrow.
As of December 31, 2024, our workforce was composed of salaried and hourly employees in the following geographic regions.
As of December 31, 2025, our workforce was composed of 12,500 salaried and hourly employees, with a geographically diverse footprint.
Such unconsolidated sales totaled approximately $224 million, $228 million, and $235 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Such unconsolidated sales totaled approximately $256 million, $224 million, and $228 million for the years ended December 31, 2025, 2024 and 2023, respectively. Fuel Systems The Fuel Systems segment provides advanced fuel injection systems, fuel delivery modules, canisters, sensors, electronic control modules and associated software, as well as OES solutions.
Finally, we have a regular cadence of talent reviews and robust succession plans for key roles in the Company, which includes the use of talent pools to help tailor development in line with career aspirations and trajectories. Health and Safety . The health and safety of our employees is a top priority.
Our reverse mentoring program pairs early-career talent with senior leaders to foster collaboration, encourage dialogue, and broaden perspectives across the organization. Additionally, we maintain a regular cadence of talent reviews and robust succession planning for key roles. These processes leverage talent pools to tailor development opportunities in line with career aspirations and organizational needs.
Additionally, we give our employees the opportunity to give back to their local communities, through community service, environmental initiatives, and educational involvement. 8 Table of Contents Employees at some of our non-U.S. facilities are unionized. We recognize that, in many of the locations where we operate, employees have freedom of association rights with third-party organizations such as labor unions.
We reinforce our employees’ understanding of the Code through required training for new hires, as well as refresher training for all employees. We recognize that, at certain locations where we operate, employees have freedom of association rights with third-party organizations such as labor unions.
We respect and support those rights, including the right to collective bargaining, in accordance with local laws. Learning and Development. We provide training and formal development opportunities for our employees to enable them to build the skills needed to reach their short- and long-term career goals.
We develop and empower our greatest asset, our people, to reach their full potential and deliver business results while embracing our shared values. Through training and formal development opportunities, we support employees in building the skills needed to achieve both short- and long-term career goals.
Additionally, our compensation infrastructure for salaried employees provides a globally consistent framework, with appropriate flexibility and country specific market data informing pay decisions and supporting our ability to provide market competitive compensation, which enables us to attract and retain highly qualified talent.
This infrastructure informs pay decisions, supporting our ability to provide competitive compensation and enabling us to attract and retain highly skilled talent. Our competitive compensation packages also are consistent with employee positions, skill levels, experience, knowledge, and geographic location.
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In addition, the sales information for the years ended December 31, 2024 and 2023 includes $23 million and $50 million, respectively, of certain contract manufacturing agreements with BorgWarner that were entered into at the time of the Spin-Off. Fuel Systems The Fuel Systems segment provides advanced fuel injection systems, fuel delivery modules, canisters, sensors, electronic control modules and associated software.
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Recent Acquisition On August 1, 2025, the Company acquired 100% of Swedish Electromagnet Invest AB (SEM) for $47 million, comprised of $15 million of cash paid and $32 million cash used to extinguish debt assumed through the acquisition.
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We strive to cultivate a culture where differences are valued, respected and embraced and provide tools and opportunities to help all employees reach their full potential.
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SEM is part of the Fuel Systems segment, and is a prominent provider of advanced natural gas, hydrogen and other alternative fuel ignition systems, injector stators and linear position sensors. Refer to Note 2, “Acquisition” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information.
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We regularly review our policies, programs and initiatives designed to promote an inclusive workforce and confirm their alignment with our strategies and efforts to foster a highly qualified talent and leadership pipeline consisting of individuals with diverse perspectives, skills and experiences.
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In the fourth quarter of 2025, the Company made a strategic decision to shift a significant portion of the OES business, previously reported in its Aftermarket segment, to the Fuel Systems segment, as distribution will now be handled by the Fuel Systems locations that manufacture the products.
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We believe recognition, and appreciation for, differences in backgrounds and experiences is an important part of creating a greater understanding of each other. Through our various initiatives, we support this belief and showcase the broad spectrum of backgrounds, experiences, and skills of our talented employees.
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This is expected to streamline the sales structure to external customers while also reducing administrative efforts. The reporting segment disclosures have been updated accordingly which included recasting prior period information for the new reporting structure.
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Total Rewards. Our total rewards program is aligned to our employee value proposition and critical to our ability to attract, engage and retain a highly talented workforce. Through this program, we deliver reward and recognition programs and competitive pay and benefit packages, including benefits to support health and wellbeing, disease prevention, management of chronic conditions, and emotional health.
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During the year ended December 31, 2025, approximately 16% of the Company’s net sales were gasoline fuel systems for light passenger vehicle applications and approximately 12% were diesel fuel systems for medium and heavy duty commercial vehicle applications. 6 Table of Contents The Company’s worldwide net sales to General Motors Company during the years ended December 31, 2025, 2024, and 2023 were 18%, 17% , and 16%, respectively.
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We offer pay and benefits that are competitive and consistent with employee positions, skill levels, experience, knowledge, and geographic location. Culture and Engagement. We regularly conduct engagement surveys to solicit feedback from employees on a variety of topics.
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Price, quality, speed of delivery, technological innovation, supply chain resilience, sourcing strategies, engineering development, scope of product technology system solutions, and program launch support are primary elements of competition.
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We incorporate this feedback into actions plans across the organization with the aim of continually improving the employee experience and ensuring our workforce remains engaged and motivated to deliver outstanding results. Our team closely monitors employee turnover as part of our efforts to identify potential opportunities for improving employee retention.
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We have our own tailored technical training along with a Leadership Development Program specifically designed to grow our technical and leadership pipelines. Our programs are delivered through multiple formats to ensure flexibility, accessibility, and scalability, making our learning solutions adaptable to the needs of an evolving global workforce and workplace.
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These opportunities are delivered to employees in a variety of formats to make our portfolio of learning and development solutions flexible, accessible, scalable and translatable to meet the needs of our evolving global workplace and workforce.
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We regularly conduct employee engagement surveys to gather feedback on a range of topics and use these insights to develop action plans across the organization. Our goal is to continuously enhance employee experience and maintain a highly engaged, motivated workforce committed to delivering exceptional results.
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Our reverse mentoring program pairs early career talent with more senior leadership and is designed to promote collaboration, foster dialogue, and raise awareness and understanding of different perspectives to deliver on our collective goals.
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Through our latest comprehensive engagement survey conducted in 2024, 84% of employees responded, helping to identify several opportunities to enhance our employee experience. Total Rewards . Our “YOU Matter” total rewards program is aligned to our people strategy framework and critical to our ability to attract, engage and retain a highly skilled workforce.
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Supplies of other raw materials are adequate and available from multiple sources to support our manufacturing requirements.
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Through this program, we deliver benefits and resources that support the physical, mental and financial well-being of our employees, tailoring programs to geography and locally identified employee and business needs. Additionally, we recognize employees and their contributions through several recognition and reward programs, as well as through the delivery of market-competitive compensation.
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Benefit packages include benefits and programs designed to support health and well-being, including disease prevention, management of chronic conditions and programs and resources to support employees in improving or managing their financial, emotional and physical well-being.
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We support the principle of equal pay for equal work and are committed to periodically engaging external advisors to assess and advise on our compensation practices, programs, and principles. Inclusion . Humility, inclusivity, integrity, and accountability are core values that guide our people-focused and inclusive culture.
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Recognizing differences in backgrounds and experiences as strengths enables us to foster this culture, which we believe drives innovation, enhances employee engagement and improves customer connection, ultimately leading to greater business success. We provide employees with tools and opportunities to help them reach their full potential.
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Our employees are also provided with the opportunity to participate, on a voluntary basis, in programs and initiatives at the global and local level that are intended to support the attraction, engagement, retention and development of highly skilled talent, promote effective collaboration in an environment free of all discrimination and biases, and form teams with a range of perspectives, skills and backgrounds.
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We respect and support those rights, including the right to collective bargaining, in accordance with local laws. Employees at some of our non-U.S. facilities are unionized and, in certain countries, particularly within Europe, certain employees are represented by an employee organization, such as a works council. Health and Safety .
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The health and safety of our employees is a top priority – discussed on a regular basis at the highest level by our CEO and management, with strategic direction provided by our Global Safety Leadership team consisting of members of management, health and safety leaders and plant managers from all regions.
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These initiatives and programs aim to facilitate engagement, share successes and focus on employees continually improving the safety of our work environments and fostering safe and healthy practices. Community Engagement . Through our community engagement initiatives, we believe in supporting the communities in which we live and work, encouraging employee involvement in local activities and charities.
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New trade regulations, including export controls on rare earth metals and semiconductors, increases in tariffs and elevated levels of steel mill plant closures could also have a material impact on our business by increasing our input costs or limiting supplies, ultimately requiring more flexibility in our supply locations through near shoring and dual sourcing.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may not realize anticipated savings or benefits from past or future actions in full or in part or within the time periods anticipated. We are also subject to the risks of labor unrest, negative publicity and business disruption in connection with our actions.
Biggest changeDuring 2025, the Company implemented actions as part of a strategic effort to align its legacy infrastructure with current business needs and reduce costs in response to ongoing industry headwinds. We may not realize the anticipated annual savings from these actions, or future savings or benefits from future actions, in full or in part or within the time periods anticipated.
In addition, these types of events could negatively impact consumer spending or result in changes in the demand for certain products and solutions in the impacted regions or globally, which could have an adverse effect on our business, financial condition and results of operations. We are subject to risks related to our international operations.
In addition, these types of events could negatively impact consumer spending or result in changes in the demand for certain of our products and solutions in the impacted regions or globally, which could have an adverse effect on our business, financial condition and results of operations. We are subject to risks related to our international operations.
In addition to our suppliers and customers, a work stoppage or production shutdown at one or more of our manufacturing and assembly facilities, including as a result of a prolonged dispute with the unionized employees at certain of our international facilities, could adversely affect our business, financial condition and results of operations.
In addition to our suppliers and customers, a work stoppage or production shutdown at one or more of our manufacturing and assembly facilities, including as a result of a prolonged dispute with unionized employees at certain of our international facilities, could adversely affect our business, financial condition and results of operations.
The failure to identify, consummate, effectively integrate or realize the expected benefits from acquisitions or partnerships could adversely affect our growth and our business, financial condition, and results of operations. We periodically evaluate selective acquisitions, partnerships, and strategic investments in connection with our growth strategy.
The failure to identify, consummate, effectively integrate or realize the expected benefits from acquisitions, partnerships or other strategic investments could adversely affect our growth and our business, financial condition, and results of operations. We periodically evaluate selective acquisitions, partnerships, and other strategic investments in connection with our growth strategy.
From time to time, we establish strategies and expectations related to the impacts of climate change and other environmental matters. Our ability to achieve any such strategies or expectations is subject to numerous factors and conditions, many of which are outside of our control.
From time to time, we establish strategies, expectations and targets related to the impacts of climate change and other environmental matters. Our ability to achieve any such strategies, expectations or targets is subject to numerous factors and conditions, many of which are outside of our control.
Any or all of these factors could adversely affect our ability to maintain relationships with customers and employees, or achieve the anticipated benefits of the acquisition on the timeline expected, and could have an adverse effect on the combined company.
Any or all of these factors could adversely affect our ability to maintain relationships with customers, suppliers, and employees, or achieve the anticipated benefits of the acquisition on the timeline expected, and could have an adverse effect on the combined company.
Many global economies have continued to experience elevated levels of inflation more generally, which has led to an increase in other input costs. As a result, the Company has experienced, and may continue to experience, higher costs.
Many global economies have experienced elevated levels of inflation more generally, which has led to an increase in other input costs. As a result, the Company has experienced, and may continue to experience, higher costs.
Disruptions in, attacks on and the integrity of our information technology systems, or on the information systems, products or services of third parties with which we engage, pose a risk to the security of our systems and data, including the data of our employees, customers and suppliers.
Disruptions in, attacks on, and the integrity of our technology systems and infrastructure, or on the information systems, products, or services of third parties with which we engage, pose a risk to the security of our systems and data, including the data of our employees, customers, and suppliers.
Our manufacturing plants use energy, including electricity and natural gas, and certain of our plants that emit greenhouse gas may in the future be affected by these legislative and regulatory efforts.
Our manufacturing plants use energy, including electricity and natural gas, and certain of our plants that emit greenhouse gases may in the future be affected by these legislative and regulatory efforts.
The impacts of climate change, regulations related to climate change and various stakeholders’ emphasis on climate change and other related matters may adversely impact our business, financial condition and results of operations.
The impacts of climate change, regulations related to climate change, various stakeholders’ emphasis on reducing the impacts of climate change, and other related matters may adversely impact our business, financial condition and results of operations.
We derived the historical financial information prior to July 3, 2023 included in this Form 10-K from the Former Parent’s consolidated financial statements, and this information does not necessarily reflect the results of operations and financial position we would have achieved as an independent, publicly traded company during the periods presented, or those that we will achieve in the future.
We derived the historical financial information prior to July 3, 2023 included in this Form 10-K from the Former Parent’s consolidated financial statements, and this information does not necessarily reflect the results of operations and financial condition we would have achieved as an independent, publicly traded company during the periods presented, or those that we will achieve in the future.
It is possible that the integration process could result in the loss of key employees, the disruption of our operations, the inability to maintain or increase our competitive presence, inconsistencies in standards, controls, procedures and policies, difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the acquisition, the diversion of management’s attention to integration matters, difficulties in the assimilation of operations, employees and corporate cultures, and/or the realization of unknown or inestimable liabilities relating to the acquired business or inaccurate assessment of undisclosed, contingent or other liabilities or complexities.
It is possible that the integration process could result in: the loss of key employees; the disruption of our operations; the inability to maintain or increase our competitive presence; inconsistencies in standards, controls, procedures and policies; difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the acquisition; the diversion of 14 Table of Contents management’s attention to integration matters; difficulties in the assimilation of operations, employees and corporate cultures; and/or the realization of unknown or inestimable liabilities relating to the acquired business or inaccurate assessment of undisclosed, contingent, or other liabilities or complexities.
Our continued success depends in part on our ability to identify, attract and onboard qualified candidates with the requisite education, background, skills and experience, and our ability to retain, develop and engage employees across our business, including our sales, manufacturing, research and development, information technology, corporate and other operations and functions.
Our continued success depends in part on our ability to identify, attract, and onboard qualified candidates with the requisite education, background, skills, and experience. It also depends on our ability to retain, develop, and engage employees across our business, including our sales, manufacturing, research and development, information technology, corporate, and other operations and functions.
For more information about our pension assets and liabilities, refer to Note 15, “Retirement Benefit Plans,” to the Consolidated Financial Statements. We are subject to a number of restrictive covenants and requirements under our indebtedness, which could limit our financial and operating flexibility and subject us to other risks.
For more information about our pension assets and liabilities, refer to Note 17, “Retirement Benefit Plans,” to the Consolidated Financial Statements. We are subject to a number of restrictive covenants and requirements under our indebtedness, which could limit our financial and operating flexibility and subject us to other risks.
Because the vehicle and equipment industries rely heavily on just-in-time delivery of components during the assembly and manufacture of products, a work stoppage or production shutdown at one or more of our suppliers’ facilities, including as a result of a prolonged dispute with unionized employees at such facilities, could impact our ability to manufacture and assemble our products and solutions, or meet the needs of our customers, which could have significant adverse effects on our business, financial condition and results of operations.
Because the transportation and industrial equipment industries rely heavily on just-in-time delivery of components during the assembly and manufacture of products, a work stoppage or production shutdown at one or more of our suppliers’ facilities, including as a result of a prolonged dispute with unionized employees at such facilities, could impact our ability to manufacture and assemble our products and solutions, or meet the needs of our customers, which could have significant adverse effects on our business, financial condition and results of operations.
If the Spin-Off were determined not to qualify as tax-free for U.S. federal income tax purposes, we could have an indemnification obligation to the Former Parent, which could adversely affect our business, financial condition and results of operations.
Risks Related to the Spin-Off If the Spin-Off were determined not to qualify as tax-free for U.S. federal income tax purposes, we could have an indemnification obligation to the Former Parent, which could adversely affect our business, financial condition and results of operations.
Although Mexico levies value added taxes and customs duties on temporary imports, in the course of the conduct of our manufacturing operations, we generally do not pay that tax due to a special certification, the availability of which depends upon our compliance with certain requirements and regulations, such as maintaining accurate records and providing periodic reports to authorities.
Although Mexico levies value added taxes and customs duties on temporary imports, in the course of the conduct of 21 Table of Contents our manufacturing operations, we generally do not pay that tax due to a special certification, the availability of which depends upon our compliance with certain requirements and regulations (such as maintaining accurate records and providing periodic reports to authorities).
Increased competition has contributed to pricing pressure, reduced margins and limited our ability to gain or hold market share. Our business in China is also sensitive to economic, political, social and market conditions that drive sales volumes in China.
Increased competition has contributed to pricing pressure, reduced margins and limited our ability to gain or hold market share. Our business in China is also sensitive to economic, geopolitical, social and market conditions that drive sales volumes in China.
The impacts of climate change continue to raise significant concern and attention worldwide, which has led to swift and stringent legislative and regulatory efforts to limit greenhouse gas emissions in certain jurisdictions in which we operate.
The impacts of climate change continue to raise significant concern and attention worldwide, which has led to swift and stringent legislative and regulatory efforts to limit greenhouse gas and other emissions to air in certain jurisdictions in which we operate.
If, as a result of any of our representations being untrue or our covenants being breached, the Spin-Off were determined not to qualify for its intended tax-free treatment, we could be required by the Tax Matters Agreement to indemnify the Former Parent for the resulting taxes and related expenses. Those amounts could be material.
If, as a result of any of our representations being untrue or our covenants being breached, the Spin-Off were determined not to qualify for its intended tax-free treatment, we could be required by the Tax Matters Agreement and any amendments or restatements thereto to indemnify the Former Parent for the resulting taxes and related expenses. Those amounts could be material.
Some cybersecurity attacks or incidents result from human error or manipulation (including phishing attacks or other schemes that use social engineering to gain access to systems), carry out disbursement of funds or other frauds, or involve ransomware, malware and other advanced persistent threats that increase the risks and costs associated with protecting against such attacks.
Some cybersecurity attacks or incidents result from human error or manipulation(including phishing, business email compromise, or other schemes or attacks that use social engineering) to gain access to systems, carry out disbursement of funds, or other frauds, or involve ransomware, malware, and other advanced persistent threats that increase the risks and costs associated with protecting against such attacks.
Our global supply chain and the operation of vehicle and industrial equipment parts manufacturing plants entails risks in these areas, and we may incur material costs or liabilities as a result.
Our global supply chain and the operation of automotive and industrial equipment parts manufacturing plants entails risks in these areas, and we may incur material costs or liabilities as a result.
Compliance with multiple and potentially conflicting laws and regulations of various countries is challenging, burdensome, and expensive. The financial statements of foreign subsidiaries are translated to U.S. Dollars using the period-end exchange rate for assets and liabilities and an average exchange rate for each period for revenues, expenses and capital expenditures.
Compliance with multiple and potentially conflicting laws and regulations of various countries is challenging, burdensome, and expensive. 18 Table of Contents The financial statements of foreign subsidiaries are translated to U.S. Dollars using the period-end exchange rate for assets and liabilities and an average exchange rate for each period for revenues, expenses and capital expenditures.
We have internal policies and procedures and supplier policies and requirements relating to compliance with anti-corruption, sanctions, import and export control laws and exchange control laws, and we conduct periodic compliance training on such laws for our employees; however, there is a risk that such policies, procedures and requirements will not always protect us from the improper acts of employees, agents, suppliers, other business partners, joint venture partners, or representatives, particularly in the case of recently acquired operations that may not have significant training in applicable compliance policies and procedures.
We have internal policies and procedures and supplier policies and requirements relating to compliance with anti-corruption, sanctions, import and export control laws and exchange control laws, and we conduct periodic compliance training on such laws for our employees and provide a hotline for employees to report potential violations of such laws; however, there is a risk that such policies, procedures and requirements will not always protect us from the improper acts of employees, agents, suppliers, other business partners, joint venture partners, or representatives, particularly in the case of recently acquired operations that may not have significant training in applicable compliance policies and procedures.
These circumstances and other rapidly changing industry conditions (such as volatile production volumes; credit tightness; tariffs and changes in trade policy and relations; changes in foreign currencies; raw material, commodity, transportation and energy price escalation; drastic changes in consumer preferences; and other factors) have resulted or could in the future result in significant supply disruptions, supplier financial instability or distress, or commercial disputes with suppliers and customers.
These circumstances and other rapidly changing industry conditions (such as volatile production volumes, credit tightness, changes in foreign currencies, raw material, commodity, transportation and energy price escalation, drastic changes in consumer preferences and other factors) have resulted or could in the future result in significant supply disruptions, supplier financial instability, or distress, commercial disputes with suppliers and customers.
If we experience a prolonged shortage of critical components from any of our suppliers and cannot procure such components from other sources, we may be unable to meet the production schedules for some of our key products 17 Table of Contents and customer delivery expectations.
If we experience a prolonged shortage of critical components from any of our suppliers and cannot procure such components from other sources, we may be unable to meet the production schedules for some of our key products and customer delivery expectations.
Many of our customers and suppliers face similar risks. Supply disruptions relating to such regulations could result in increased costs, jeopardize the continuity of production, and have an adverse effect on our business, financial condition and results of operations.
Many of our customers and suppliers face similar risks. Supply chain disruptions or constraints relating to such regulations could result in increased costs, jeopardize the continuity of production, and have an adverse effect on our business, financial condition and results of operations.
Our failure to successfully launch vehicle programs, or our inability to accurately estimate costs to design, develop and launch new vehicle programs, could have an adverse effect on our business, financial condition, and results of operations. 15 Table of Contents To the extent we are not able to successfully launch a new vehicle program, our customer’s vehicle production could be significantly delayed or shut down.
Our failure to successfully launch new programs, or our inability to accurately estimate costs to design, develop and launch new machine, engine or vehicle programs, could have an adverse effect on our business, financial condition and results of operations. 16 Table of Contents To the extent we are not able to successfully launch a new program, our customer’s vehicle production could be significantly delayed or shut down.
Our business, financial condition and results of operations are sensitive to global and regional business and economic conditions, particularly those specific to the global vehicle and industrial equipment industries.
Our business, financial condition and results of operations are sensitive to global and regional business and economic conditions, particularly those specific to the global automotive and industrial equipment industries.
Additionally, a material deterioration in the funded status of the plans could significantly increase our pension expenses and reduce profitability in the future. Each of the foregoing risks could have an adverse effect on our business, financial condition and results of operations.
Additionally, a material deterioration in the funded status of the plans could significantly increase our pension expenses and reduce profitability in the future. Each of the foregoing risks could have an adverse effect on our business, financial condition and results of 23 Table of Contents operations.
The launch of a new vehicle program for a customer is a complex process, the success of which depends on a wide range of factors, including the production readiness of our manufacturing facilities and processes and those of our suppliers, as well as factors related to tooling, equipment, employees, initial product quality and other factors.
The launch of a new machine, engine or vehicle program for a customer is a complex process, the success of which depends on a wide range of factors, including the production readiness of our manufacturing facilities and processes and those of our suppliers and customers, as well as factors related to tooling, equipment, employees, initial product quality and other factors.
The local currency is typically the functional currency for our foreign subsidiaries. While we did not experience significant foreign currency impacts during 2024, significant foreign currency fluctuations and the associated translation of those foreign currencies could adversely affect our business.
The local currency is typically the functional currency for our foreign subsidiaries. While we did not experience significant adverse foreign currency impacts during 2025, significant foreign currency fluctuations and the associated translation of those foreign currencies could adversely affect our business.
Likewise, a failure to comply with any current or future climate, environmental and related reporting requirements, including those established by regulators in the U.S. and Europe, may result in loss of business, regulatory penalties, increased litigation risk and reputational damage.
Likewise, a failure to comply with any current or future climate, environmental and related reporting requirements, including those established by regulators in the United States and Europe, may result in loss of business, regulatory penalties, increased litigation risk and reputational damage.
In connection with the separation, and prior to the distribution, we and the Former Parent entered into various transaction agreements related to the Spin-Off, pursuant to which both we and the Former Parent have liabilities and performance obligations. Certain of these agreements continue to govern our relationship with the Former Parent following the Spin-Off.
In connection with the separation, and prior to the distribution, we and the Former Parent entered into various transaction agreements related to the Spin-Off, pursuant to which both we and the Former Parent have liabilities and performance obligations. Certain of these agreements and any amendments and restatements thereto continue to govern our relationship with the Former Parent following the Spin-Off.
Examples of such factors include, but are not limited to, evolving legal, regulatory and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, the availability of renewable energy sources, changes in carbon markets, government incentives and tax credits, and changes in general economic, financial and industry conditions.
Examples of such factors include: evolving legal, regulatory and other standards, processes, and assumptions; the pace of scientific and technological developments; increased costs; the availability of requisite financing; the availability of renewable energy sources; changes in carbon markets; government incentives and tax credits; and changes in general economic, financial and industry conditions.
Disruptions in our supply chain have in the past and could in the future adversely affect our business, financial condition, and results of operations. We obtain components and other products and services from numerous suppliers and other vendors throughout the world.
Risks Related to Our Customers and Suppliers Disruptions in our supply chain have in the past, and could in the future, adversely affect our business, financial condition and results of operations. We obtain components and other products and services from numerous suppliers and other vendors throughout the world.
For the automotive industry in particular, although global supply chains have recovered from the disruption caused by the COVID-19 pandemic, other circumstances (such as the ongoing conflict between Russia and Ukraine, natural disasters and extreme weather events) have caused supply constraints for certain components that have impacted, and some of which continue to impact, global industry production levels.
For the global transportation industry in particular, although global supply chains have recovered from the disruption caused by the COVID-19 pandemic, other circumstances (such as the ongoing conflict between Russia and Ukraine, trade restrictions, terrorist attacks, natural disasters and extreme weather events) have caused supply constraints for certain components that have impacted, and some of which continue to impact, global industry production levels.
Although we seek to recover inflationary and other costs and surcharges from our customers and have had some success in the past in recovering a portion of these costs and surcharges, our ability to pass through increased costs to our OEM customers is limited (with any cost recovery often less than 100% and on a delayed basis) and there can be no assurance that such recoveries will continue in the future.
Although we seek to recover inflationary and other costs and surcharges, including relating to tariffs, from our customers and have had some success in the past in recovering a portion of these costs and surcharges, our ability to pass through increased costs to our customers can be limited (with any cost recovery sometimes less than 100% and on a delayed basis) and there can be no assurance that such recoveries will continue in the future.
Consequently, our results would be affected by changes in trade, monetary and fiscal policies, trade restrictions or prohibitions, import tariffs or other charges or taxes, fluctuations in foreign currency exchange rates, limitations on the repatriation of funds, changing economic conditions, unreliable intellectual property protection and legal systems, insufficient infrastructures, social unrest, political instability and disputes, international terrorism, acts of war and other factors that may be discrete to a particular country or geography.
Consequently, our results have been and may continue to be adversely affected by fluctuations in foreign currency exchange rates and higher tariffs, and by other trade restrictions or prohibitions, import tariffs or other charges or taxes, changes in trade, monetary and fiscal policies, limitations on the repatriation of funds, changing economic conditions, higher labor costs, unreliable intellectual property protection and legal systems, insufficient infrastructures, social unrest, political and geopolitical instability and disputes, international terrorism, acts of war and other factors that may be discrete to a particular country or geography.
The global vehicle industry has been, and is largely expected to continue to be, focused on increased fuel efficiency and reduced emissions, including the development of hybrid and electric vehicles, primarily as a result of changing consumer preferences and increasingly stringent global regulatory requirements related to the impacts of climate change.
The global transportation industry has been, and is largely expected to continue to be, focused on increased fuel efficiency and reduced emissions, including the development of hybrid electric and alternative fuel vehicles, primarily as a result of changing consumer preferences and increasingly stringent regulatory requirements in certain jurisdictions related to the impacts of climate change.
Changes in laws, regulations and government policies on foreign trade and investment can affect the demand for our products and services, cause customers to shift preferences towards domestically manufactured or branded products, and impact the competitive position of our products or prevent us from being able to sell or manufacture products in certain countries.
Changes in laws, regulations and government policies on foreign trade and investment can affect the production, pricing, and demand relating to our products and solutions, cause customers to shift preferences towards domestically manufactured or branded products, and impact the competitive position of our products or prevent us from being able to sell or manufacture products in certain countries.
Our operations and products are subject to laws governing, among other things: emissions to air; discharges to waters; the generation, management, transportation and disposal of waste and other materials; packaging; health and safety; human rights; and other matters relating to corporate sustainability.
Our operations and products, and those of our customers, are subject to laws governing, among other things: emissions to air; discharges to waters; the generation, management, transportation and disposal of waste and other materials; packaging; the use of natural resources; health and safety; human rights; and other matters relating to corporate sustainability.
Failures or delays (whether actual or perceived) in achieving our strategies or expectations related to climate change and other environmental matters could adversely affect our business, financial condition and results of operations, harm our reputation, result in our inability to meet the expectations of our customers and other stakeholders, and increase the risk of litigation.
Failures or delays (whether actual or perceived) in achieving our strategies, expectations or targets related to climate change and other environmental matters could adversely affect our business, financial 22 Table of Contents condition and results of operations, harm our reputation and competitive position, result in our inability to meet the expectations of our customers and other stakeholders, and increase the risk of litigation.
We have in the past and likely will in the future derive a significant portion of our net sales from a relatively limited number of OEM customers. For the year ended December 31, 2024, our top five customers accounted for approximately 40% of our net sales, with General Motors Company representing 17%.
We have in the past, and likely will in the future, derive a significant portion of our net sales from a relatively limited number of OEM customers. For the year ended December 31, 2025, our top five customers accounted for approximately 37% of our net sales, with General Motors Company representing 18%.
As a result, our products may not be able to compete successfully with our competitors’ products, and we may not be able to meet the growing demands of customers. These trends could adversely affect our business, financial condition and results of operations, including our sales and the profit margins on our products.
As a result, our products and solutions may not be able to compete successfully with those of our competitors, and we may not be able to meet the growing demands of our customers. These trends could adversely affect our competitive position, business, financial condition and results of operations, including our sales and the profit margins on our products and solutions.
We have only operated as an independent, publicly traded company since July 3, 2023, and our historical combined financial information is not necessarily representative of the results we would have achieved as an independent, publicly traded company and may not be a reliable indicator of our future results.
We have only operated as an independent, publicly traded company since July 3, 2023, and our historical combined financial information for periods prior to such date is not necessarily representative of the results we would have achieved as an independent, publicly traded company and may not be a reliable indicator of our future results.
Economic declines resulting in significant reductions in commercial vehicle or light vehicle production have in the past adversely affected our business, financial condition and results of operations, including our sales to OEMs, and could again in the future.
Economic declines resulting in significant reductions in commercial vehicle, light commercial vehicle and light passenger vehicle production have in the past adversely affected our business, financial condition and results of operations, including our sales to OEMs, and could have similar effects in the future.
In recent years, the global economy and entire industries have experienced global supply chain shortages and other disruptions, including due to natural disasters or extreme weather events, political disruptions, pandemics or other public health crises, terrorist attacks, acts of war, labor or social unrest, government actions (such as relating to trade laws and tariffs), cybersecurity attacks or incidents and other circumstances.
In recent years, the global economy and entire industries have experienced global supply chain shortages and other disruptions, including due to natural disasters or extreme weather events, political disruptions, pandemics or other public health crises, terrorist attacks, acts of war, labor or social unrest, government actions (such as relating to trade laws, tariffs and import and export controls), cybersecurity attacks or incidents, manufacturing disasters (such as burn downs), financially distressed suppliers and other circumstances.
In addition, a recall claim could require us to review our entire product portfolio to assess whether similar issues are present in other product lines, which could result in significant disruption to our business and could have an adverse impact on our financial condition and results of operations.
In addition, a recall claim could require us to review the relevant portion 20 Table of Contents of our product portfolio to assess whether similar issues are present in other product lines, which could result in significant disruption to our business and could have an adverse impact on our financial condition and results of operations.
We have liabilities related to product warranties, litigation and other claims. We provide product warranties to our customers for some of our products. Under these product warranties, we may be required to bear costs and expenses for the repair or replacement of these products.
Risks Related to Regulatory, Legal and Similar Matters We have liabilities related to product warranties, litigation and other claims. We provide product warranties to our customers for some of our products. Under these product warranties, we may be required to bear costs and expenses, including for the repair or replacement of these products.
The same may be true of transportation carriers and energy providers. If these supply interruptions occur, it could adversely affect our business, financial condition and results of operations. Prices for commodities remain volatile, and since the beginning of 2021, the Company has experienced price increases for energy and base metals (e.g., steel, aluminum and copper) while slightly decreasing in 2024.
The same may be true of transportation carriers and energy providers. If these supply interruptions occur, it could adversely affect our business, financial condition and results of operations. Prices for commodities remain volatile, and since the beginning of 2024, the Company has experienced price increases for energy and base metals (such as steel, aluminum and copper).
These claims typically arise in the normal course of business and may include, but not be limited to, commercial or contractual disputes with our customers and suppliers, intellectual property matters, personal injury, product liability, environmental and employment claims.
These claims typically arise in the normal course of business and may include commercial or contractual disputes with our customers and suppliers, intellectual property, personal injury, product liability, environmental and employment claims.
We cannot assure that costs and expenses associated with these claims will not be material or that those costs will not exceed any amounts accrued for such claims in our financial statements. In addition, we are currently, and may in the future become, subject to other commercial or contractual disputes and legal proceedings.
Actual costs and expenses associated with these claims could be material or exceed any amounts accrued for such claims in our financial statements. In addition, we are currently, and may in the future become, subject to other commercial or contractual disputes and legal proceedings.
If any additional disputes were to arise between the parties, such disputes could have a material adverse effect on our financial position, results of operations and cash flows. For more information regarding the BorgWarner Dispute, refer to Note 18, “Contingencies,” to the Consolidated Financial Statements.
If any additional disputes were to arise between the parties, such disputes could have a material adverse effect on our financial condition results of operations and cash flows. For more information regarding the Settlement Agreement, refer to Note 20, “Contingencies,” to the Consolidated Financial Statements.
Risks Related to Our Industry and Strategy Adverse changes in general business and economic conditions, including recessions, adverse market conditions or downturns impacting the vehicle and industrial equipment industries, have in the past and may in the future adversely affect our business, financial condition, and results of operations.
Risks Related to Our Industry and Strategy Adverse changes in general business and economic conditions, including recessions, adverse market conditions or downturns and other factors, including geopolitical tensions and related trade restrictions, impacting the transportation and industrial equipment industries, have in the past and may in the future adversely affect our business, financial condition, and results of operations.
We use a variety of commodities (including aluminum, copper, nickel, plastic resins, steel, other raw materials and energy) and materials purchased in various forms, such as castings, powder metal, forgings, stampings and bar stock, in the production of our products. In recent years, prices for many of these commodities have increased.
We use a variety of commodities (including aluminum, copper, nickel, plastic resins, steel, certain alloy elements, semiconductor chips, and energy) and materials purchased in various forms (including castings, powder metal, forgings, stampings and bar stock) in the production of our products. In recent years, prices for many of these commodities have increased.
Although the Company has had success offsetting higher costs through a combination of productivity and customer recoveries, there can be no guarantee that the Company will continue to be successful doing so in the future, should inflation remain at elevated levels.
Although the Company has offset higher costs through a combination of productivity and customer recoveries in the past, there can be no guarantee that the Company will continue to be successful in doing so in the future should inflation remain at elevated levels or further increase.
Nearly all of our manufacturing facilities are outside the U.S., including other regions in the Americas, Europe, and Asia.
Nearly all of our manufacturing facilities are outside the United States, including other regions in the Americas, Europe and Asia.
In addition, as we continue to develop and invest in products and solutions involving alternative fuels (such as hydrogen, ammonia, ethanol, compressed natural gas and other zero- or lower-carbon fuel types) designed to enhance fuel efficiency and reduce emissions, we may experience an increase in fuel and product quality-related product warranty or other claims.
In addition, as we continue to develop and invest in products and solutions involving alternative fuels (e.g., hydrogen, ammonia, ethanol, methanol, compressed natural gas and other zero- and lower-carbon fuel types) designed to enhance fuel efficiency and reduce emissions, we may experience an increase in claims.
Through our products and solutions, we are focused on enhancing fuel efficiency and driving growth through our ability to capitalize on other trends, such as the adoption of alternative fuels (e.g., hydrogen, ammonia, ethanol, compressed natural gas and other zero- or lower-carbon fuel types) for combustion-powered vehicles, industrial machinery and other applications.
Through our products and solutions, we are focused on enhancing fuel efficiency and driving growth through our ability to capitalize on other strategies for lower carbon mobility, such as the transition to alternative fuels (e.g., hydrogen, ammonia, ethanol, methanol, compressed natural gas, bio-fuels and other zero- and lower-carbon fuel 13 Table of Contents types) for combustion-powered vehicles, industrial machinery and other applications.
The ongoing energy transition away from fossil fuels and the adoption of electrified powertrains in some market segments, notably the passenger car market segment, has resulted, and could continue to result, in lower demand for certain of our products.
The ongoing energy transition away from fossil fuels in certain jurisdictions and the adoption of electrified powertrains in some markets (notably the passenger car segment, and to some degree in the light and medium duty commercial vehicle segments) has resulted, and could continue to result, in lower demand for certain of our products.
To realize the anticipated benefits of acquisitions or partnerships, both companies must be successfully combined. The combination of independent businesses is a complex, costly, and time-consuming process that requires significant management attention and resources.
To realize the anticipated benefits of acquisitions or partnerships, including the SEM acquisition, the combination must be successful. The combination of independent businesses is a complex, costly, and time-consuming process that requires significant management attention and resources.
While we will continue to negotiate the pass through and recovery of higher costs with our customers, perpetuation of this trend could adversely affect our business, financial condition and results of operations.
While we will continue to negotiate the pass through and recovery of higher costs with our customers, perpetuation of this trend could adversely affect our business, financial condition and results of operations. Our profitability and results of operations may be adversely affected by program launch difficulties.
There is a possibility that any such claims may have an adverse impact on our business that is greater than we anticipate.
It is possible that any such claims may have an adverse impact on our business that is greater than we anticipate.
We could incur restructuring charges as we execute restructuring and other actions in an effort to improve future profitability and competitiveness and to optimize our product portfolio, and we may not achieve the anticipated savings and benefits from these actions.
Our execution of restructuring and other actions in an effort to improve future profitability and competitiveness, optimize our product portfolio and operations and execute our strategy has caused us and could cause us in the future to incur restructuring charges, and we may not achieve the anticipated savings and benefits from these actions.
These claims may also arise under the Separation and Distribution Agreement we entered into with the Former Parent in connection with the Spin-Off, which allocated responsibility to us for various legacy matters, including certain items that are otherwise unrelated to our business.
These claims may also arise under the Separation and Distribution Agreement we entered into with the Former Parent in connection with the Spin-Off, which allocated responsibility to us for various legacy matters, including certain items that are otherwise unrelated to our business, or the Amended and Restated Tax Matters Agreement entered into with the Former Parent during 2025 to resolve a dispute relating to the Tax Matters Agreement entered into by the parties in connection with the Spin-Off.
Factors outside our control, including the quality of fuel in end user markets or our products operating under conditions not originally contemplated, may increase our exposure for warranty or recall claims.
Factors outside our control, including the quality of fuel in end-user markets or our products operating under conditions not originally included in our customer’s technical requirements specification, or contemplated by either our customers or ourselves, may increase our exposure for warranty or recall claims.
Nevertheless, cybersecurity attacks on the Company continue unabated and future cybersecurity attacks or incidents could potentially lead to the inappropriate disclosure of confidential information (including our intellectual property or employee, customer or supplier data), improper use of our systems and networks, access to and manipulation and destruction of our third-party data, production downtimes or delays, lost revenues, inappropriate disbursement of funds, and both internal and external supply shortages.
We continue to monitor, assess, and protect against these risks, as future cybersecurity attacks or incidents on the Company could cause the inappropriate disclosure of confidential information (including our intellectual property or employee, customer, or supplier data), improper use of our systems and networks, access to and manipulation and destruction of our third-party data, production downtimes or delays, lost revenues, inappropriate disbursement of 15 Table of Contents funds, and both internal and external supply shortages.
Risks Related to Our Business and Operations We are under substantial pressure from OEMs to reduce the prices of our products. There is substantial and continuing pressure on OEMs to reduce costs, including the costs of products we supply. OEM customers expect annual price reductions in our business.
We are under substantial pressure from our customers to reduce the prices of our products. There is substantial and continuing pressure from our customers to reduce costs. Our customers often expect annual price reductions in our business.
For additional information about our past financial performance and the basis of presentation of our historical combined financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our historical financial statements and the notes thereto.
For additional information about our past financial performance and the basis of presentation of our historical combined financial statements, see our historical financial statements and the notes thereto.
The vehicle and other equipment supply markets in China are highly competitive, with competition from many of the largest global manufacturers and numerous smaller domestic manufacturers. As the Chinese market evolves, many market participants have acted aggressively to increase or maintain their market share.
Maintaining a strong position in the Chinese market is a key component of our global strategy. The transportation and industrial equipment supply markets in China are highly competitive, with competition from many of the largest global manufacturers and numerous smaller domestic manufacturers. As the Chinese market evolves, many market participants have acted aggressively to increase or maintain their market share.
Given the early stages of development of some of these new products and solutions, there can be no guarantee of the future market acceptance and investment returns with respect to our planned products.
Given the early stages of development of some of these products and solutions and the infrastructure challenges that accompany certain alternative fuel adoption, there can be no guarantee of future market acceptance, regulatory acceptance and investment returns with respect to our planned products and solutions.
Significant negative industry or macroeconomic trends, disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets, dispositions, and market capitalization declines may impair these assets.
We periodically assess these assets, along with long-lived assets, to determine if they are impaired. Significant negative industry or macroeconomic trends, disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets, dispositions, and market capitalization declines may impair these assets.
If we fail to comply with any covenants or other requirements, our lenders and bondholders may, among other things, terminate their obligation to make advances to us and declare any outstanding obligations immediately due and payable, as applicable, which could have a material adverse impact on our business, financial condition and results of operations. 21 Table of Contents 22 Table of Contents Risks Related to the Spin-Off We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off.
If we fail to comply with any covenants or other requirements, our lenders and bondholders may, among other things, terminate their obligation to make advances to us and declare any outstanding obligations immediately due and payable, as applicable, which could have a material adverse impact on our business, financial condition and results of operations.
We rely on sales to OEMs around the world of varying credit quality and manufacturing demands. Supply to several of these customers requires significant investment by us. We base our growth projections, in part, on commitments made by our customers. These commitments by OEMs generally renew yearly during a program life cycle.
We face credit, operational and sales concentration risks related to our customers. We rely on sales to OEMs around the world of varying credit quality and manufacturing demands. Supply to several of these customers requires significant investment by us. We base our growth projections, in part, on commitments made by our customers.
Commercial vehicle, industrial application and light vehicle production and sales are cyclical and sensitive to general economic conditions and other factors, including inflation, interest rates, consumer credit, and consumer spending and preferences.
Commercial vehicle, light commercial vehicle, light passenger vehicle, and industrial application production and sales are cyclical and sensitive to general economic conditions and other factors, including geopolitical tensions, inflation (including related to the cost of labor and the price of commodities), interest rates, consumer credit, and consumer spending and preferences.
Our inability to reduce costs (in an amount equal to or less than) annual price reductions, increases in tariffs, increases in raw material costs, increases in employee wages and benefits and other inflationary headwinds could have an adverse effect on our business, financial condition and results of operations. 13 Table of Contents We continue to face volatile costs of commodities used in the production of our products and elevated levels of inflation.
Our inability to reduce costs (in an amount equal to or less than) annual price reductions, increases in tariffs, increases in raw material costs, increases in employee wages and benefits and other inflationary headwinds could have an adverse effect on our business, financial condition and results of operations.
If we do not deliver new products, services and technologies in response to changing consumer preferences and increased regulation of greenhouse gas emissions, or if the market for electric vehicles grows faster than expected, our business, financial condition, and results of operations could be adversely impacted.
If we do not deliver new products, services and technologies in response to changing consumer preferences and evolving exhaust emissions- regulations, or if the market for electric vehicles grows faster than expected and the market for alternative fuel technologies, including for use in internal combustion engines, develops slower than expected, our business, financial condition, and results of operations could be adversely impacted.
Such situations could result in significant financial penalties to us, or a diversion of employees and financial resources to improving launches rather than investing in continuous process improvement or other growth initiatives, and could result in our customers shifting work away from us to a competitor, any of which could result in loss of revenue or loss of market share and could have an adverse effect on our business, financial condition and results of operations.
Such situations could result in significant financial penalties to us, or a diversion of employees and financial resources to improving launches, rather than investing in continuous process improvement or other growth initiatives, and could result in our customers shifting work away from us to a competitor.
Among other things, the level of production orders we receive is dependent on the ability of our OEM customers to design and sell products that consumers desire to purchase.
These commitments by OEMs generally renew yearly during a program life cycle. Among other things, the level of production orders we receive is dependent on the ability of our OEM customers to design and sell products that consumers desire to purchase.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

17 edited+2 added−2 removed2 unchanged
Biggest changeThe Company has processes in place for identifying and overseeing cybersecurity risks presented by third-party users of the Company’s systems, as well as third-party systems used by the Company. • Training. The Company requires personnel, including new hires, to complete training regarding cybersecurity threats, incident reporting procedures and acceptable use of our information systems. • Incident Response Planning.
Biggest changeThe Company requires personnel, including new hires, to complete training regarding cybersecurity threats (including phishing, business email compromise and other schemes or attacks that use social engineering, and new disruptors, such as artificial intelligence), incident and threat reporting procedures, data protection and acceptable use of our technology systems. • Incident Response Planning.
The Company’s Incident Response Team consists of our CISO and other senior leaders from the Company’s cybersecurity (composed of information security and technology operations), compliance, legal, financial reporting and other key business and corporate functions. The CISO and other Incident Response Team members monitor the prevention, detection, mitigation and remediation of cybersecurity incidents in accordance with the incident response plan.
The Company’s Incident Response Team consists of our CIO and other senior leaders from the Company’s cybersecurity (composed of information security and technology operations), compliance, legal, financial reporting and other key business and corporate functions. The CIO and other Incident Response Team members monitor the prevention, detection, mitigation and remediation of cybersecurity incidents in accordance with the incident response plan.
The Company deploys system safeguards that are designed to protect the Company’s information systems from cybersecurity threats, including early detection and response antivirus tools, data leak prevention tools and systems, vulnerability scans of data centers, firewalls, anti-malware functionality and access controls, and programs to support remediation, replacement or isolation of systems that have reached, or are expected to reach, end of security life. • Third-Party Collaboration.
The Company deploys system safeguards that are designed to protect the Company’s technology systems and infrastructure from cybersecurity threats, including early detection and response antivirus tools, data leak prevention tools and systems, vulnerability scans of data centers, firewalls, anti-malware functionality and access controls, and programs to support remediation, replacement or isolation of systems that have reached, or are expected to reach, end of security life. • Third-Party Collaboration.
The team is also responsible for informing and coordinating with the Company’s Disclosure Committee in timely reporting such incidents, as appropriate and depending on the severity 25 Table of Contents of the incident, and facilitating updates to the Strategy Board (consisting of our CEO, Chief Financial Officer (CFO), General Counsel, CIO and other members of management), Audit Committee and Board regarding such incidents until addressed.
The team is also responsible for informing and coordinating with the Company’s Disclosure Committee in timely reporting such incidents, as appropriate and depending on the severity of the incident, and facilitating updates to the Strategy Board (consisting of our CEO, Chief Financial Officer (CFO), General Counsel, CIO and other members of management), Audit Committee and Board regarding such incidents until addressed.
The cybersecurity team, in coordination with other Incident Response Team members, works collaboratively across the Company to implement a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to cybersecurity incidents.
The cybersecurity team, in coordination with other Incident Response Team members, works collaboratively across the Company to implement a program designed to protect the Company’s technology systems from cybersecurity threats and to promptly respond to cybersecurity incidents.
The Company has established and maintains a cybersecurity incident response plan that outlines an organized and timely approach for responding to and handling security incidents affecting the Company’s systems or data, including the intrusions or incidents involving data from a third party.
The Company maintains a cybersecurity incident response plan that outlines an organized and timely approach for responding to and handling cybersecurity incidents affecting the Company’s technology systems or data, including intrusions or incidents involving data from a third party.
The Company utilizes collaboration mechanisms established with public and private entities, including intelligence and enforcement agencies, industry groups, and third-party service providers, to identify, assess and respond to cybersecurity risks. • Third-Party Risk Management.
The Company utilizes collaboration mechanisms established with public and private entities, including intelligence and enforcement agencies, industry groups, and third-party service providers, to identify, assess and respond to cybersecurity risks. 25 Table of Contents • Third-Party Risk Management.
A key part of the Company’s strategy for managing risks from cybersecurity threats is the ongoing assessment and testing of the Company’s policies and processes through audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on evaluating the effectiveness of our cybersecurity controls and oversight.
A key part of the Company’s strategy for managing risks from cybersecurity threats is the ongoing assessment and testing of the Company’s policies, processes and strategies through audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on evaluating the effectiveness of our cybersecurity controls and oversight and identifying potential opportunities for enhancements.
Our cybersecurity and data protection policies, processes and strategies are informed by regulatory and business requirements, our prior experience addressing cybersecurity attacks and incidents (including with our 24 Table of Contents former affiliates) and industry practices, and are periodically adjusted based on the results of assessments conducted through our ERM practices, third-party audits and independent reviews, and other processes.
Our cybersecurity and data protection policies, processes and strategies are informed by regulatory and business requirements, our prior experience addressing cybersecurity attacks and incidents (including with our former affiliates), industry practices and standards, and are periodically adjusted based on the results of assessments conducted through our ERM practices, third-party audits and independent reviews, tabletop exercises, and other processes.
The Company maintains 24/7 cybersecurity threat surveillance in conjunction with a managed security service that monitors system logs and network traffic for indicators of compromise and other suspicious activity, and conducts monthly external vulnerability assessments and annual penetration testing. • System Safeguards.
Our cybersecurity policies, processes and strategies focus on the following areas: • Surveillance and Monitoring. The Company maintains 24/7 cybersecurity threat surveillance in conjunction with a managed security service that monitors system logs and network traffic for indicators of compromise and other suspicious activity, and conducts monthly external vulnerability assessments and annual penetration testing. • System Safeguards.
Governance The Board, in coordination with the Audit Committee, oversees the Company’s policies with respect to the assessment and management of risks from cybersecurity threats. The Board receives updates regarding cybersecurity risks primarily in connection with its oversight of the Company’s risk management practices.
Governance The Board, in coordination with the Audit Committee, oversees risks from cybersecurity threats and the Company’s processes for assessing and managing cybersecurity risks. The Board receives updates from management regarding cybersecurity risks and the Company’s processes in connection with its oversight of the Company’s ERM program and risk management practices.
Item 1C. Cybersecurity Risk Management and Strategy As part of our overall risk management system and processes, we assess, identify and manage material risks from cybersecurity threats through our Enterprise Risk Management (ERM) program.
Item 1C. Cybersecurity Risk Management and Strategy As part of our overall risk management program, we describe below the processes used to assess, identify, and manage material risks from cybersecurity threats, including how these processes are used to manage cybersecurity risks through our Enterprise Risk Management (ERM) program and for reporting to management and our Board of Directors (the Board).
To date, we have not experienced a cybersecurity incident or attack, or any risk from cybersecurity threats, that has materially affected or is reasonably likely to materially affect the Company or our business strategy, results of operations, or financial condition.
To date, risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the Company and are not reasonably likely to materially affect our business strategy, results of operations, or financial condition.
He is also a Digital Directors Network (DDN) Boardroom Certified Qualified Technology Expert (QTE). In addition, the Company’s CEO, CFO and General Counsel each have experience overseeing the management of cybersecurity and other risks similar to those impacting the Company’s business.
In addition, the Company’s CEO, CFO and General Counsel each have experience overseeing the management of cybersecurity and other risks similar to those impacting the Company’s business. 26 Table of Contents
The Audit Committee receives updates regarding cybersecurity risks from the Company’s Chief Information Security Officer (CISO) and Chief Information Officer (CIO), including with respect to the assessment and management of such risks and recent developments, trends and the general threat environment, on at least a quarterly basis.
The Audit Committee receives updates from the CIO, supported by the cybersecurity team, including regarding (i) management’s monitoring, assessment and management of cybersecurity risks, (ii) the Company’s strategies and processes for prevention, detection, mitigation, and remediation, and (iii) recent developments, trends and the general threat environment. Updates to the Board or Audit Committee occur on at least a quarterly basis.
We have experienced leaders responsible for assessing and managing risks arising from cybersecurity threats. Our CISO reports to the CIO and has served in various roles in information technology and information security for over 29 years, including most recently leading the Information Security Office of BorgWarner Inc. He holds a Bachelor of Science in Physics.
We have experienced leaders responsible for managing and overseeing risks arising from cybersecurity threats. Our CIO reports to the CEO and has significant experience serving in various roles in technology and information security, including CIO of Gentherm Incorporated immediately prior to joining the Company, where he oversaw Gentherm’s cybersecurity program.
The Company’s cybersecurity team, which is led by our CISO, oversees the Company’s cybersecurity and data security operations, programs, policies and processes and their general effectiveness.
The Company’s cybersecurity team, led by our CIO, oversees the Company’s cybersecurity and data security operations, programs, policies and processes and their general effectiveness. Our CIO directly oversees the broader cybersecurity team while the Company actively searches for a Chief Information Security Officer due to a recent vacancy in the position.
Removed
Consistent with the Company’s ERM practices, our cybersecurity policies, processes and layers of defense focus on the following areas: • Surveillance and Monitoring.
Added
The Company maintains processes designed to identify and oversee material risks from cybersecurity threats associated with third-party users of the Company’s technology systems and data, as well as third-party service providers’ systems used by the Company. • Training.
Removed
The Company’s CIO reports to our CEO and has served in various roles in information technology and information security for over 26 years, including CIO of Gentherm Incorporated immediately prior to joining the Company. Our CIO holds a Bachelor of Science in Business, with a concentration in Computer Information Systems, and an MBA in Finance and Strategic Management.
Added
The Board also receives updates from the Chief Information Officer (CIO) regarding the Company’s technology systems and infrastructure in connection with its general oversight of the execution and development of key strategies and initiatives.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOf the 23 facilities, 15 are leased sites, four of which contain Company-owned building and infrastructure with land lease contracts.
Biggest changeOf the 25 facilities, 17 are leased sites, four of which contain Company-owned building and infrastructure with land lease contracts. Compared to the prior year, the Company has acquired two leased facilities, one in Europe and one in Asia related to the SEM acquisition.
Item 2. Properties As of December 31, 2024, the Company had 23 principal manufacturing, assembly and technical facilities worldwide, including our global headquarters and excluding unconsolidated joint venture and administrative offices. Our global headquarters is located in a leased facility in Auburn Hills, Michigan.
Item 2. Properties As of December 31, 2025, the Company had 25 principal manufacturing, assembly and technical facilities worldwide, including our global headquarters and excluding unconsolidated joint venture and administrative offices. Our global headquarters is located in a leased facility in Auburn Hills, Michigan.
The Company, its subsidiaries and affiliates operate principal manufacturing, assembly and technical facilities in the following regions: Americas Europe Asia Total Number of principal manufacturing, assembly and technical facilities (1) 8 9 6 23 ___________ (1) Excludes unconsolidated joint venture and administrative offices.
The Company, its subsidiaries and affiliates operate principal manufacturing, assembly and technical facilities in the following regions: Americas Europe Asia Total Number of principal manufacturing, assembly and technical facilities (1) 8 10 7 25 ___________ (1) Excludes unconsolidated joint venture and administrative offices.
Removed
Compared to the prior year, one of the leased sites in Europe ceased operations in early November 2024, was no longer a principal facility leased by the Company at December 31, 2024 and, as a result, is excluded from the above facility totals.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changeSee Note 18, “Contingencies,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for additional information. SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold.
Biggest changeSee Note 20, “Contingencies,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for additional information. SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of December 31, 2024, the Company repurchased $236 million of common stock under its repurchase program, excluding the impact of Federal excise tax, and $164 million remained available for repurchase. On February 13, 2025, the Company announced that its Board of Directors increased the authorization by $200 million for a total share repurchase program of $600 million.
Biggest changeOn February 13, 2025, the Company announced that its Board of Directors increased the authorization by $200 million for a total share repurchase program of $600 million. As of December 31, 2025, the Company repurchased $436 million of common stock under its repurchase program, excluding the impact of Federal excise tax, and $164 million remained available for repurchase.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is listed for trading on the New York Stock Exchange under the symbol PHIN. As of February 7, 2025, there were 1,168 holders of record of common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock is listed for trading on the New York Stock Exchange under the symbol PHIN. As of February 5, 2026, there were 1,078 holders of record of common stock.
While the Company currently expects that quarterly cash dividends will continue to be paid in the future at levels comparable to recent historical levels, the dividend policy is subject to review and change at the discretion of the Board of Directors.
While the Company currently expects that quarterly cash dividends will continue to be paid in the future at levels comparable to recent historical levels, such dividends are subject to review, approval and change at the discretion of the Board of Directors.
July 5, 2023 December 31, 2023 December 31, 2024 PHINIA Inc. $ 100 $ 84 $ 137 S&P 600 Index $ 100 $ 110 $ 120 S&P 600 Automotive Parts & Equipment Index $ 100 $ 98 $ 96 27 Table of Contents The following table provides information about the Company’s purchases of its equity securities that are registered pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2024: Issuer Purchases of Equity Securities Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under plans or programs (in millions) (2) October 1, 2024 - October 31, 2024 Common Stock Repurchase Program — $ — — $ 188 Employee transactions (1) 1,332 $ 39.67 November 1, 2024 - November 30, 2024 Common Stock Repurchase Program 223,178 $ 53.41 223,178 $ 176 December 1, 2024 - December 31, 2024 Common Stock Repurchase Program 225,709 $ 53.46 225,709 $ 164 Employee transactions (1) 25,353 $ 48.17 (1) An aggregate of 26,685 shares of the Company’s common stock were withheld by the Company in connection with employees’ payment of taxes associated with the vesting of their restricted stock units granted under the PHINIA Inc. 2023 Stock Incentive Plan.
July 5, 2023 December 31, 2023 December 31, 2024 December 31, 2025 PHINIA Inc. $ 100 $ 84 $ 137 $ 182 S&P 600 Index $ 100 $ 110 $ 120 $ 127 S&P 600 Automotive Parts & Equipment Index $ 100 $ 98 $ 96 $ 121 28 Table of Contents The following table provides information about the Company’s purchases of its equity securities that are registered pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2025: Issuer Purchases of Equity Securities Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under plans or programs (in millions) (2) November 1, 2025 - November 30, 2025 Common Stock Repurchase Program 430,236 $ 53.46 430,236 $ 171 Employee transactions (1) 312 $ 51.91 December 1, 2025 - December 31, 2025 Common Stock Repurchase Program 128,442 $ 54.51 128,442 $ 164 Employee transactions (1) 23,732 $ 62.69 (1) An aggregate of 24,044 shares of the Company’s common stock were withheld by the Company in connection with employees’ payment of taxes associated with the vesting of their restricted stock units granted under the PHINIA Inc. 2023 Stock Incentive Plan.
Added
On January 29, 2026, the Company announced that its Board of Directors increased the authorization by $150 million for a total share repurchase program of $750 million. The Company has $314 million remaining available for repurchase as of January 29, 2026.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

64 edited+28 added−40 removed54 unchanged
Biggest changeRESULTS OF OPERATIONS A detailed comparison of the Company’s 2023 operating results to its 2022 operating results can be found in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in the Company’s Annual Report on Form 10-K filed on February 28, 2024. 29 Table of Contents The following table presents a summary of the Company’s 2024 and 2023 operating results: Year Ended December 31, (in millions, except per share data) 2024 2023 Net sales % of net sales % of net sales Fuel Systems 2,264 66.5 2,407 68.8 Aftermarket 1,393 40.9 1,329 38.0 Inter-segment eliminations (254) (7.4) (236) (6.8) Total net sales 3,403 100.0 3,500 100.0 Cost of sales 2,647 77.8 2,776 79.3 Gross profit 756 22.2 724 20.7 Selling, general and administrative expenses 442 13.0 413 11.8 Other operating expense, net 55 1.6 70 2.0 Operating income 259 7.6 241 6.9 Equity in affiliates’ earnings, net of tax (11) (0.3) (10) (0.3) Interest expense 99 2.9 56 1.6 Interest income (16) (0.5) (13) (0.4) Other postretirement expense — — 2 0.1 Earnings before income taxes 187 5.5 206 5.9 Provision for income taxes 108 3.2 104 3.0 Net earnings 79 2.3 102 2.9 Earnings per share — diluted $ 1.76 $ 2.17 Net sales Net sales for the year ended December 31, 2024 totaled $3,403 million, a decrease of $97 million, or 3%, from the year ended December 31, 2023.
Biggest changeThe following table presents a summary of the Company’s 2025 and 2024 operating results: 30 Table of Contents Year Ended December 31, (in millions, except per share data) 2025 2024 Net sales % of net sales % of net sales Fuel Systems $ 2,320 66.6 % $ 2,275 66.9 % Aftermarket 1,306 37.5 % 1,282 37.7 % Inter-segment eliminations (143) (4.1) % (154) (4.6) % Total net sales 3,483 100.0 % 3,403 100.0 % Cost of sales 2,721 78.1 % 2,647 77.8 % Gross profit 762 21.9 % 756 22.2 % Selling, general and administrative expenses 445 12.8 % 442 13.0 % Restructuring expense 17 0.5 % 14 0.4 % Other operating expense, net 46 1.3 % 41 1.2 % Operating income 254 7.3 % 259 7.6 % Equity in affiliates’ earnings, net of tax (15) (0.4) % (11) (0.3) % Interest expense 81 2.3 % 99 2.9 % Interest income (14) (0.4) % (16) (0.5) % Other postretirement expense 4 0.1 % — — % Earnings before income taxes 198 5.7 % 187 5.5 % Provision for income taxes 68 2.0 % 108 3.2 % Net earnings 130 3.7 % 79 2.3 % Earnings per share — diluted $ 3.24 $ 1.76 Net sales and Cost of sales Net sales for the year ended December 31, 2025 totaled $3,483 million, an increase of $80 million, or 2.4%, from the year ended December 31, 2024.
Refer to Note 10, “Goodwill and Other Intangibles,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding goodwill. Product warranties The Company provides warranties on some, but not all, of its products sold to OEMs. The warranty terms are typically from one to three years.
Refer to Note 12, “Goodwill and Other Intangibles,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding goodwill. Product warranties The Company provides warranties on some, but not all, of its products sold to OEMs. The warranty terms are typically from one to three years.
We believe our existing cash and cash flows generated from operations and the revolving credit 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.
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.
The Company has certain U.S. state income tax returns and certain non-U.S. income tax returns that are currently under various stages of audit by applicable tax authorities. At December 31, 2024, the Company had a liability for tax positions the Company estimates are not more-likely-than-not to be sustained based on the technical merits, which is included in other non-current liabilities.
The Company has certain U.S. state income tax returns and certain non-U.S. income tax returns that are currently under various stages of audit by applicable tax authorities. At December 31, 2025, the Company had a liability for tax positions the Company estimates are not more-likely-than-not to be sustained based on the technical merits, which is included in other non-current liabilities.
During the third quarter of 2024, the Company recorded a non-cash pre-tax loss on extinguishment of $2 million related to the difference between the repayment amount and net carrying amount of the Term Loan A Facility, which is included in the Interest expense line item on the Condensed Consolidated Statements of Operations. Refer to Note 12.
During the third quarter of 2024, the Company recorded a non-cash pre-tax loss on extinguishment of $2 million related to the difference between the repayment amount and net carrying amount of the Term Loan A Facility, which is included in the Interest expense line item on the Condensed Consolidated Statements of Operations. Refer to Note 14.
We are a global supplier to most major OEMs seeking to meet and exceed increasingly stringent global regulatory requirements and satisfy consumer demands for an enhanced user experience. Additionally, we offer a wide range of OES solutions and remanufactured products as well as an expanded range of products for the independent (non-OEM) aftermarket.
We are a global supplier to most major OEMs seeking to meet or exceed evolving and increasingly stringent global regulatory requirements and satisfy consumer demands for an enhanced user experience. Additionally, we offer a wide range of OES solutions and remanufactured products as well as an expanded range of products for the independent (non-OEM) aftermarket.
Pillar 2 does not have a material impact to the Company’s effective tax rate or consolidated results of operation, financial position or cash flows. Refer to Note 5, “Income Taxes,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding income taxes.
Pillar 2 does not have a material impact to the Company’s effective tax rate or consolidated results of operation, financial position or cash flows. Refer to Note 7, “Income Taxes,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding income taxes.
The Company evaluates, on a quarterly basis, developments in commercial and legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and reasonably estimable, the Company does not 35 Table of Contents establish an accrued liability.
The Company evaluates, on a quarterly basis, developments in commercial and legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and 36 Table of Contents reasonably estimable. If a loss contingency is not both probable and reasonably estimable, the Company does not establish an accrued liability.
The primary assumptions affecting the Company’s accounting for employee benefits under ASC Topic 715 as of December 31, 2024 are as follows: • Expected long-term rate of return on plan assets The expected long-term rate of return is used in the calculation of net periodic benefit cost.
The primary assumptions affecting the Company’s accounting for employee benefits under ASC Topic 715 as of December 31, 2025 are as follows: • Expected long-term rate of return on plan assets The expected long-term rate of return is used in the calculation of net periodic benefit cost.
The Company also considers the impact of active management of the plans’ invested assets. In determining its pension expense for the year ended December 31, 2024, the Company used long-term rates of return on plan assets ranging from 2.5% to 8.0%.
The Company also considers the impact of active management of the plans’ invested assets. In determining its pension expense for the year ended December 31, 2025, the Company used long-term rates of return on plan assets ranging from 2.5% to 8.0%.
Certain assumptions, including the expected long-term rate of return on plan assets, discount rate and rates of increase in compensation are described in Note 15, “Retirement Benefit Plans,” to the Consolidated Financial Statements in this Form 10-K.
Certain assumptions, including the expected long-term rate of return on plan assets, discount rate and rates of increase in compensation are described in Note 17, “Retirement Benefit Plans,” to the Consolidated Financial Statements in this Form 10-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION PHINIA is a leader in the development, design and manufacture of integrated components and systems that are designed to optimize performance, increase efficiency and reduce emissions in combustion and hybrid propulsion for commercial vehicles and industrial applications (medium-duty and heavy-duty trucks, buses and other off-highway construction, marine, agricultural and industrial applications), light commercial vehicles (vans and trucks) and light passenger vehicles (passenger cars, mini-vans, cross-overs and sport-utility vehicles).
Management’s Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION PHINIA is a leader in the development, design and manufacture of integrated components and systems that are designed to optimize performance, enhance efficiency and reduce emissions in combustion and hybrid propulsion systems for commercial vehicles and industrial applications (medium-duty and heavy-duty trucks, buses and other off-highway construction, marine, agricultural and aerospace and defense), light commercial vehicles (vans and trucks) and light passenger vehicles (passenger cars, mini-vans, cross-overs and sport-utility vehicles).
The sensitivity to a 25 basis-point change in the assumptions for expected return on assets related to 2025 pre-tax pension expense for Company sponsored pension plans is expected to be $2 million.
The sensitivity to a 25 basis-point change in the assumptions for expected return on assets related to 2026 pre-tax pension expense for Company sponsored pension plans is expected to be $2 million.
As of December 31, 2024, the Company had no outstanding borrowings under the Revolving Facility, and availability of $499 million. The Term Loan B Facility was fully repaid in connection with the issuance of the 6.75% Senior Secured Notes due 2029 on April 4, 2024, as discussed below.
As of December 31, 2025, the Company had no outstanding borrowings under the Revolving Facility, and availability of $500 million. The Term Loan B Facility was fully repaid in connection with the issuance of the 6.75% Senior Secured Notes due 2029 on April 4, 2024, as discussed below.
The sensitivity to a 25 basis-point change in the assumptions for discount rate related to 2025 pre-tax pension expense for Company sponsored pension plans is expected to be negligible.
The sensitivity to a 25 basis-point change in the assumptions for discount rate related to 2026 pre-tax pension expense for Company sponsored pension plans is expected to be negligible.
The required use of the expected long-term rate of return on plan assets may result in recognized returns that are greater or less than the actual returns on those plan assets in any 37 Table of Contents given year. Over time, however, the expected long-term rate of return on plan assets is designed to approximate actual earned long-term returns.
The required use of the expected long-term rate of return on plan assets may result in recognized returns that are greater or less than the actual returns on those plan assets in any given year. Over time, however, the expected long-term rate of return on plan assets is designed to approximate actual earned long-term returns.
The following table illustrates the sensitivity to a change in the discount rate for Company sponsored pension plans on its pension obligations: (in millions) Impact on PBO 25 basis point decrease in discount rate $ 23 25 basis point increase in discount rate $ (22) Refer to Note 15, “Retirement Benefit Plans,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding the Company’s retirement benefit plans.
The following table illustrates the sensitivity to a change in the discount rate for Company sponsored pension plans on its pension obligations: (in millions) Impact on PBO 25 basis point decrease in discount rate $ 24 25 basis point increase in discount rate $ (23) Refer to Note 17, “Retirement Benefit Plans,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding the Company’s retirement benefit plans.
There are several trends that are driving the Company’s long-term growth that management expects to continue, including market share expansion in the CV market, growth in overall vehicle parc that supports aftermarket demand, increased consumer interest in hybrid and plug-in vehicles, and adoption of additional product offerings enabling zero- and lower-carbon fuel solutions for combustion vehicles.
There are several trends that are driving the Company’s long-term growth that management expects to continue, including market share 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 expansion in the aerospace and defense industry.
In addition, the Company 36 Table of Contents may test goodwill in between annual test dates if an event occurs or circumstances change that could more-likely-than-not reduce the fair value of a reporting unit below its carrying value.
In addition, the Company may test goodwill in between annual test dates if an event occurs or circumstances change that could more-likely-than-not reduce the fair value of a reporting unit below its carrying value.
For the purposes of these financial statements, the Company’s income tax provision was computed as if the Company filed separate tax returns (i.e., as if the Company had not been included in the consolidated income tax return group with the Former Parent).
For the purposes of these financial statements, the Company’s 39 Table of Contents income tax provision was computed as if the Company filed separate tax returns (i.e., as if the Company had not been included in the consolidated income tax return group with the Former Parent).
Issuance of Senior Notes On April 4, 2024, the Company issued $525 million aggregate principal amount of 6.75% Senior Secured Notes due 2029 (the 2029 Notes) pursuant to an indenture among the Company, as issuer, certain subsidiaries of the 33 Table of Contents Company named as guarantors, and U.S. Bank Trust Company, National Association, as trustee and as collateral agent.
Senior Notes On April 4, 2024, the Company issued $525 million aggregate principal amount of 6.75% Senior Secured Notes due 2029 (the 2029 Notes) pursuant to an indenture among the Company, as issuer, certain subsidiaries of the Company named as guarantors, and U.S. Bank Trust Company, National Association, as trustee and as collateral agent.
New Accounting Pronouncements Refer to Note 1, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding new applicable accounting pronouncements. 39 Table of Contents
New Accounting Pronouncements Refer to Note 1, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding new applicable accounting pronouncements.
The Term Loan A Facility was fully repaid in connection with the issuance of the 6.625% Senior Notes due 2032 on September 17, 2024, as discussed below.
The Term Loan A 34 Table of Contents Facility was fully repaid in connection with the issuance of the 6.625% Senior Notes due 2032 on September 17, 2024, as discussed below.
The Tax Matters Agreement generally governs our and the Former Parent’s respective rights, responsibilities and obligations after the distribution with respect to taxes for any tax period ending on or before the 38 Table of Contents distribution date, as well as tax periods beginning before and ending after the distribution date.
The Tax Matters Agreement generally governs our and the Former Parent’s respective rights, responsibilities and obligations after the distribution with respect to taxes for any tax period ending on or before the distribution date, as well as tax periods beginning before and ending after the distribution date.
Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the accrual: Year Ended December 31, (in millions) 2024 2023 Net sales $ 3,403 $ 3,500 Warranty provision $ 48 $ 41 Warranty provision as a percentage of net sales 1.4 % 1.2 % The sensitivity to a 25 basis-point change (as a percentage of net sales) in the assumed warranty trend on the Company’s accrued warranty liability was approximately $9 million.
Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the accrual: Year Ended December 31, (in millions) 2025 2024 Net sales $ 3,483 $ 3,403 Warranty provision $ 44 $ 48 Warranty provision as a percentage of net sales 1.3 % 1.4 % The sensitivity to a 25 basis-point change (as a percentage of net sales) in the assumed warranty trend on the Company’s accrued warranty liability was approximately $9 million.
Contractual Obligations The Company’s significant cash requirements for contractual obligations as of December 31, 2024, primarily consisted of the principal and interest payments on its notes payable and long-term debt, non-cancelable lease obligations, and capital spending obligations. The principal amount of revolving credit facility, notes payable and long-term debt was $1,001 million as of December 31, 2024.
Contractual Obligations The Company’s significant cash requirements for contractual obligations as of December 31, 2025, primarily consisted of the principal and interest payments on its notes payable and long-term debt, non-cancelable lease obligations, and capital spending obligations. The principal amount of Revolving Facility, notes payable and long-term debt was $981 million as of December 31, 2025.
Actual returns on U.K. pension assets were (6.2)% and 2.4% for the years ended December 31, 2024 and 2023, respectively, compared to the expected rate of return assumption of 5.25% and 5.5%, respectively, for the same years ended. • Discount rate The discount rate is used to calculate pension obligations.
Actual returns on U.K. pension assets were 3.7% and (6.2)% for the years ended December 31, 2025 and 2024, respectively, compared to the expected rate of return assumption of 5.75% and 5.25%, respectively, for the same years ended. • Discount rate The discount rate is used to calculate pension obligations.
Refer to Note 19, “Leases and Commitments,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information. Capital spending obligations were $51 million as of December 31, 2024.
Refer to Note 21, “Leases and Commitments,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information. Capital spending obligations were $37 million as of December 31, 2025.
The projected interest payments over the terms of that debt were $399 million as of December 31, 2024. Refer to Note 12, “Notes Payable and Debt,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information. As of December 31, 2024, non-cancelable lease obligations were $62 million.
The projected interest payments over the terms of that debt were $333 million as of December 31, 2025. Refer to Note 14, “Notes Payable and Debt,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information. As of December 31, 2025, non-cancelable lease obligations were $58 million.
At December 31, 2024, all legal funding requirements had been met. The Company contributed $5 million to its defined benefit pension plans in each of the years ended December 31, 2024 and 2023. The Company expects to contribute a total of $5 million to $9 million into its defined benefit pension plans during 2025.
At December 31, 2025, all legal funding requirements had been met. The Company contributed $8 million and $5 million to its defined benefit pension plans in the years ended December 31, 2025 and 2024, respectively. The Company expects to contribute a total of $12 million to $14 million into its defined benefit pension plans during 2026.
Except as set forth below, the Company’s management does not expect that an adverse outcome in any of these commercial and legal claims, actions and complaints that are currently pending will have a material adverse effect on the Company’s results of operations, financial position or cash flows.
The Company’s management does not expect that an adverse outcome in any of these commercial and legal claims, actions and complaints that are currently pending will have a material adverse effect on the Company’s results of operations, financial position or cash flows. An adverse outcome could, nonetheless, be material to the results of operations, financial position or cash flows.
During the year ended December 31, 2024, the Company sold $122 million of receivables under these arrangements. As of December 31, 2024 the Company had cash and cash equivalent balance of $484 million, of which $409 million was held by our subsidiaries outside of the United States.
During the year ended December 31, 2025, the Company sold $162 million of receivables under these arrangements. As of December 31, 2025 the Company had cash and cash equivalent balance of $359 million, of which $330 million was held by our subsidiaries outside of the United States.
On February 13, 2025, the Company announced that its Board of Directors declared an increased quarterly cash dividend of $0.27 per share of common stock, payable on March 14, 2025. The Company has a credit rating of BB+ from Standard & Poor's and Ba1 from Moody's. The current outlook from both Standard & Poor’s and Moody’s is stable.
On January 29, 2026, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock, payable on March 20, 2026. The Company has a credit rating of BB+ from Standard & Poor's and Ba1 from Moody's. The current outlook from both Standard & Poor’s and Moody’s is stable.
For its significant plans, the Company used discount rates ranging from 1.7% to 22.3% to determine its pension obligations as of December 31, 2024, including weighted average discount rates of 5.9% (including 5.6% in the U.K.). The U.K. discount rate reflects the fact that the pension plan has been closed for new participants.
For its significant plans, the Company used discount rates ranging from 2.45% to 23.5% to determine its pension obligations as of December 31, 2025, including weighted average discount rates of 5.8% (including 5.5% in the U.K.). The U.K. discount rate reflects the fact that the pension plan has been closed for new participants.
The Company maintains a positive long-term outlook for its global business and is committed to new product development and strategic investments to enhance its product leadership strategy.
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.
Additionally, we may be impacted by other macroeconomic challenges in 2025, including but not limited to inflation, supply chain constraints, market volatility, higher tariffs relevant to our operations (particularly in Mexico and China) and changes in international trade relations.
Additionally, we expect to continue to be impacted by other macroeconomic challenges in 2026, including but not limited to elevated inflation, supply chain constraints, market volatility, higher tariffs (particularly in Mexico and China), government shutdowns, and changes in international trade relations.
Cost of sales and gross profit Cost of sales and cost of sales as a percentage of net sales were $2,647 million and 77.8%, respectively, during the year ended December 31, 2024, compared to $2,776 million and 79.3%, respectively, during the year ended December 31, 2023.
Cost of sales and cost of sales as a percentage of net sales were $2,721 million and 78.1%, respectively, during the year December 31, 2025, compared to $2,647 million and 77.8%, respectively, during the year ended December 31, 2024.
Year Ended December 31, 2024 2023 Net earnings per diluted share $ 1.76 $ 2.17 Separation and transaction costs 0.69 1.70 Intangibles amortization expense 0.63 0.60 Loss on debt extinguishment 0.49 — Asset impairments 0.47 — Restructuring expense 0.31 0.26 Royalty income from Former Parent — (0.36) (Gains) losses for other one-time events (0.16) 0.06 Tax effects and adjustments (0.33) (0.24) Adjusted net earnings per diluted share $ 3.86 $ 4.19 Results by Reportable Segment The Company’s business is comprised of two reportable segments: Fuel Systems and Aftermarket.
Year Ended December 31, 2025 2024 Net earnings per diluted share $ 3.24 $ 1.76 Separation-related costs 1.07 0.69 Amortization of acquisition-related intangibles 0.75 0.63 Restructuring expense 0.42 0.31 Merger and acquisition costs 0.22 — Asset impairments — 0.47 Loss on debt extinguishment — 0.49 Gains for other one-time events (0.05) (0.16) Tax effects and adjustments (0.69) (0.33) Adjusted net earnings per diluted share $ 4.96 $ 3.86 Results by Reportable Segment The Company’s business is comprised of two reportable segments: Fuel Systems and Aftermarket.
The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025.
Such potential impact could be material to the Company’s consolidated financial condition or results of operations for an individual reporting period. 40 Table of Contents The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar 2), with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025.
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, separation and transaction 32 Table of Contents costs, intangible asset amortization expense, impairment charges and other items not reflective of ongoing operating income or loss.
Segment AOI is comprised of segment operating income adjusted for restructuring, separation-related costs, merger and acquisition costs, intangible asset amortization expense, impairment charges and other items not reflective of 33 Table of Contents ongoing operating income or loss. The Company believes Segment AOI is most reflective of the operational profitability or loss of its reportable segments.
At December 31, 2024, the total accrued warranty liability was $61 million. The accrual is represented as $36 million in Other current liabilities and $25 million in Other non-current liabilities on the Consolidated Balance Sheets. Refer to Note 11, “Product Warranty,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding product warranties.
The accrual is represented as $35 million in Other current liabilities and $39 million in Other non-current lia bilities on the Consolidated Balance Sheets. 38 Table of Contents Refer to Note 13, “Product Warranty,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding product warranties.
The Company believes Segment AOI is most reflective of the operational profitability or loss of its reportable segments. 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 $92 million and $47 million for the years ended December 31, 2024 and 2023, respectively.
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 $104 million and $92 million for the years ended December 31, 2025 and 2024, respectively.
On February 1, 2024, May 9, 2024, August 1, 2024 and November 14, 2024, the Company’s Board of Directors declared quarterly cash dividends of $0.25 per share of common stock. These dividends were paid on March 15, 2024, June 14, 2024, September 13, 2024 and December 13, 2024, respectively.
On February 13, 2025, May 21, 2025, July 31, 2025 and October 30, 2025, the Company’s Board of Directors declared quarterly cash dividends of $0.27 per share of common stock. These dividends were paid on March 14, 2025, June 16, 2025, September 12, 2025 and December 12, 2025, respectively.
This expense was fully offset by a discrete tax benefit related to unremitted earnings as a result of change in structure and favorable provision to return adjustments in various jurisdictions.
This expense was fully offset by a discrete tax benefit related to unremitted earnings as a result of change in structure and favorable provision to return adjustments in various jurisdictions. For further details, see Note 7, “Income Taxes,” to the Consolidated Financial Statements in Item 8 of this Form10-K.
As a percentage of sales, capital expenditures were 3.1% and 4.3% for the years ended December 31, 2024 and 2023, respectively. 34 Table of Contents Financing Activities Net cash used in financing activities was $96 million during the year ended December 31, 2024 compared to net cash provided by financing activities of $20 million in the year ended December 31, 2023.
As a percentage of sales, capital expenditures were 3.6% and 3.1% for the years ended December 31, 2025 and 2024, respectively. Financing Activities Net cash used in financing activities was $310 million and $96 million during the years ended December 31, 2025 and 2024, respectively. The increase is primarily related to the timing of issuance and repayment of debt.
Refer to Note 15, “Retirement Benefit Plans,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding costs and assumptions for employee retirement benefits.
The Company believes it will be able to fund the requirements of these plans through cash generated from operations or other available sources of financing for the foreseeable future. Refer to Note 17, “Retirement Benefit Plans,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information regarding costs and assumptions for employee retirement benefits.
Other postretirement expense was de minimus and $2 million in the years ended December 31, 2024 and 2023, respectively. The decrease in other postretirement expense for the year ended December 31, 2024 was primarily due to higher interest and inflationary costs in 2023.
Other postretirement expense Other postretirement expense was $4 million and de minimus in the years ended December 31, 2025 and 2024, respectively.
Adjusted earnings per diluted share The Company defines adjusted net earnings per diluted share as net earnings per share adjusted to exclude the tax-effected impact of restructuring expense, separation and transaction costs, intangible asset amortization, impairment charges, other net expenses, and other gains, losses and tax amounts not reflective of the Company’s ongoing operations.
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.
Interest income was $16 million and $13 million in the years ended December 31, 2024 and 2023, respectively. The increase was primarily due to increased cash and cash equivalents balances, as well as higher interest rates on cash and cash equivalents balances.
This line item is driven by the results of the Company’s unconsolidated joint venture. Interest income Interest income was $14 million and $16 million in the years ended December 31, 2025 and 2024, respectively. The decrease was primarily due to decreased cash and cash equivalents balances, as well as lower interest rates on cash and cash equivalents balances.
The change in cost of sales for the year ended December 31, 2024 was primarily driven by the following: • Lower volume, mix and net new business decreased cost of sales by approximately $78 million.
The change in net sales, cost of sales, and gross profit for the year ended December 31, 2025 was primarily driven by the impacts below.
Management believes that the estimates of future cash flows and fair value assumptions are reasonable; however, changes in assumptions underlying these estimates could affect the valuations.
If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. 37 Table of Contents Management believes that the estimates of future cash flows and fair value assumptions are reasonable; however, changes in assumptions underlying these estimates could affect the valuations.
Provision for income taxes was $108 million for the year ended December 31, 2024 resulting in an effective tax rate of 58%. This compared to $104 million or 50% for the year ended December 31, 2023.
This compared to $108 million or 58% for the year ended December 31, 2024.
Management determines fair value under ASC Topic 820 using the appropriate valuation technique of market, income or cost approach. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.
Management determines fair value under ASC Topic 820 using the appropriate valuation technique of market, income or cost approach.
On July 3, 2023, BorgWarner completed the Spin-Off in a transaction intended to qualify as tax-free to BorgWarner’s stockholders for U.S. federal income tax purposes, which was accomplished by the distribution of the outstanding common stock of PHINIA to holders of record of common stock of BorgWarner on a pro rata basis.
The separation was completed in the form of a distribution of the outstanding common stock of PHINIA to holders of record of common stock of BorgWarner on a pro rata basis (the Spin-Off).
The increase was primarily related to the issuance of debt in connection with the Spin-Off as well as the loss on extinguishment of debt of $22 million in 2024. See Note 12, “Notes Payable and Debt”, for further discussion of the loss on extinguishment of debt.
Interest expense Interest expense was $81 million and $99 million in the years ended December 31, 2025 and 2024, respectively. The decrease was primarily related to the loss on extinguishment as a result of the restructuring of the Company’s debt positions in 2024. See Note 14, “Notes Payable and Debt”, for further discussion.
The increase for the year ended December 31, 2024, compared with the year ended December 31, 2023, was primarily due to improved working capital and higher net earnings adjusted for non-cash items. Investing Activities Net cash used in investing activities was $101 million and $150 million in the years ended December 31, 2024 and 2023, respectively.
Cash Flows Operating Activities Net cash provided by operating activities was $312 million for the year ended December 31, 2025, comparable with $308 million in the year ended December 31, 2024. 35 Table of Contents Investing Activities Net cash used in investing activities was $132 million and $101 million in the years ended December 31, 2025 and 2024, respectively, primarily related to capital expenditures and the SEM acquisition.
None of the Company’s debt agreements require accelerated repayment in the event of a downgrade in credit ratings. Cash Flows Operating Activities Net cash provided by operating activities was $308 million and $250 million in the years ended December 31, 2024 and 2023, respectively.
None of the Company’s debt agreements require accelerated repayment in the event of a downgrade in credit ratings.
Of the $5 million to $9 million in projected 2025 contributions, $2 million are contractually obligated, while any remaining payments would be discretionary. The funded status of all pension plans was a net unfunded position of $113 million and $133 million at December 31, 2024 and 2023, respectively.
The funded status of all pension plans was a net unfunded position of $142 million and $113 million at December 31, 2025 and 2024, respectively. The increase in the net unfunded position was a result of higher interest costs, partially offset by higher asset returns.
Transition to Standalone Company On December 6, 2022, BorgWarner Inc., a manufacturer and supplier of automotive industry components and parts (BorgWarner, or Former Parent), announced plans for the complete legal and structural separation of its Fuel Systems and Aftermarket businesses by the spin-off of its wholly-owned subsidiary, PHINIA, which was formed on February 9, 2023 (the Spin-Off).
Transition to Standalone Company On July 3, 2023, PHINIA became an independent publicly traded company as a result of the legal and structural separation of the Fuel Systems and Aftermarket businesses from BorgWarner Inc. (BorgWarner or Former Parent).
Other operating expense, net was comprised of the following: • For the years ended December 31, 2024 and 2023, separation and transaction costs were $31 million and $80 million, respectively, primarily related to professional fees and other costs associated with the Spin-Off. • During the year ended December 31, 2024, the Company recorded a non-cash impairment expense of $21 million related to the write down of property, plant and equipment associated with a Fuel Systems manufacturing plant in Europe. • Restructuring expense was $14 million and $12 million for the years ended December 31, 2024 and 2023, respectively, related to individually approved restructuring actions that primarily related to reductions in headcount.
The change in Other operating expense, net was primarily driven by an increase in separation-related costs, primarily from a $39 million loss in connection with the settlement of separation-related claims with the Former Parent, partially offset by the non-recurrence of non-cash impairment expense related to the write down of property, plant and equipment associated with a Fuel Systems manufacturing plant in Europe.
In addition, we believe we are well positioned to continue to expand our differentiated offerings and capabilities across electronics, software and complete systems. Relationship with BorgWarner Historically, we have relied on BorgWarner to provide various corporate functions.
In addition, we believe we are well positioned to continue to expand our differentiated offerings and capabilities across electronics, software and complete systems. Use of Non-GAAP Financial Measures This Form 10-K contains information about PHINIA’s financial results that is not presented in accordance with accounting principles generally accepted in the United States (GAAP).
The following table presents net sales and Segment AOI for the Company’s reportable segments: Year Ended December 31, 2024 Year Ended December 31, 2023 (in millions) Net sales to customers Segment AOI % margin Net sales to customers Segment AOI % margin Fuel Systems $ 2,020 $ 218 10.8 % $ 2,177 $ 215 9.9 % Aftermarket 1,383 220 15.9 % 1,323 196 14.8 % Totals $ 3,403 $ 438 $ 3,500 $ 411 The Fuel Systems segment’s net sales for the year ended December 31, 2024 decreased $157 million, or 7%, and Segment AOI increased $3 million, or 1.4%, from the year ended December 31, 2023.
The following table presents net sales and Segment AOI for the Company’s reportable segments: Year Ended December 31, 2025 Year Ended December 31, 2024 (in millions) Net sales to customers Segment AOI % margin Net sales to customers Segment AOI % margin Fuel Systems $ 2,177 $ 244 11.2 % $ 2,131 $ 228 10.7 % Aftermarket 1,306 211 16.2 % 1,272 210 16.5 % Totals $ 3,483 $ 455 $ 3,403 $ 438 The following table presents the year-over-year change in net sales and Segment AOI for the Company’s reportable segments for the year ended: Fuel Systems Aftermarket (in millions) Net sales Segment AOI Net sales Segment AOI December 31, 2024 $ 2,131 $ 228 $ 1,272 $ 210 Volume and mix 6 (18) (8) (5) Customer pricing (3) (3) 5 5 Supplier costs — 5 — 2 Tariff cost and recovery 13 (2) 25 — Contract manufacturing agreements (23) — — — SEM acquisition 20 1 — — Research and development — 10 — — Foreign currency and other 33 23 12 (1) December 31, 2025 $ 2,177 $ 244 $ 1,306 $ 211 The Fuel Systems segment’s Segment Adjusted Operating margin was 11.2% for the year ended December 31, 2025, compared to 10.7% for the year ended December 31, 2024.
LV volumes in our key markets for 2025 are expected to decline by mid-single digit percentages. CV volumes in our key markets are expected to rebound from 2024 levels in the low-single digit percentages, however weighted to the latter part of the year.
Continued economic and geopolitical uncertainty is expected to continue to impact LV and CV volumes. In our key markets for 2026, LV and CV volumes are expected to decline by mid-single and low-single digit percentages, respectively. Assuming constant foreign exchange rates and excluding sales from acquisitions, we expect a modest increase in sales.
The increase in corporate expenses in 2024 is primarily related to additional costs resulting from operating as a standalone company.
The increase in corporate expenses was primarily related to additional costs resulting from moving to a fully staffed standalone company and exiting the transition service agreements with the Former Parent and the addition of a second tranche of performance stock units under the Company's stock incentive plan.
Removed
Each holder of record of BorgWarner common stock received one share of PHINIA common stock for every five shares of BorgWarner common stock held on June 23, 2023, the record date. In lieu of fractional shares of PHINIA, BorgWarner stockholders received cash.
Added
In connection with the Spin-Off, we entered into an agreement with the Former Parent which governs the Company’s and the Former Parent’s respective rights, responsibilities and obligations after the distribution with respect to taxes for any tax period ending on or before the distribution date, as well as tax periods beginning before and ending after the distribution date (Tax Matters Agreement). 29 Table of Contents Acquisition of Swedish Electromagnet Invest AB (SEM) 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.
Removed
As a result of these transactions, all of the assets, liabilities, and legal 28 Table of Contents entities comprising BorgWarner’s Fuel Systems and Aftermarket businesses are now owned directly, or indirectly through its subsidiaries, by PHINIA. PHINIA is an independent public company trading under the symbol “PHIN” on the New York Stock Exchange.
Added
See Note 2, “Acquisition”, for further discussion. Key Trends and Economic Factors T he automotive industry is currently grappling with renewed semi-conductor shortages, supply chain disruptions, and economic and geopolitical tensions. These factors may affect production, pricing, and consumer demand.
Removed
Key Trends and Economic Factors Commodities and Other Inflationary Impacts. Prices for commodities remain volatile, and since the beginning of 2021, the Company’s business has experienced price increases for base metals (e.g., steel, aluminum and copper) while slightly decreasing in 2024.
Added
In addition, new trade restrictions, including export controls, and/or increases in tariffs could have a material impact on our business, financial condition, or results of operations, including increasing our input costs and decreasing demand in the commercial vehicle (CV) and light vehicle (LV) markets , although the nature of those trade restrictions and tariffs remains unclear.
Removed
In addition, many global economies are experiencing elevated levels of inflation more generally, which is driving an increase in other input costs. As a result, the Company has experienced, and is continuing to experience, higher costs.
Added
These new trade restrictions and tariffs increase the risk for elevated inflation more generally, which may drive an increase in other input costs. Outlook 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.
Removed
Outlook We expect earnings and cash generation in 2025 to be challenged as we expect foreign currency and a softening of the original equipment (OE) markets to outpace our ability to drive operational efficiencies and grow our Aftermarket sales. Continued economic and political uncertainty has caused the commercial vehicle (CV) and light vehicle (LV) markets to soften.
Added
Such non-GAAP financial measures are reconciled to their most directly comparable GAAP financial measures in this Form 10-K. The reconciliations include all information reasonably available to the Company at the date of this Form 10-K and the adjustments that management can reasonably predict.
Removed
Assuming constant foreign exchange rates, we expect flat to a modest increase in sales as strong growth in our Aftermarket segment is expected to offset the softened OE markets.
Added
Management believes that these non-GAAP financial measures are useful to management, investors, and banking institutions in their analysis of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure.
Removed
Following the Spin-Off, BorgWarner has not provided us with assistance other than the limited transition and other services described under the heading “Certain Relationships and Related Party Transactions” in the Company’s proxy statement for its 2024 Annual Meeting of Stockholders filed on March 27, 2024.
Added
Additionally, because not all companies use identical calculations, the non-GAAP financial measures as presented by PHINIA may not be comparable to similarly titled measures reported by other companies.
Removed
The Company entered into several agreements with BorgWarner that govern the relationship between the parties following the Spin-Off that are described in our Form 8-K filed on July 7, 2023. BorgWarner was only obligated to provide the transition services for limited periods following the completion of the Spin-Off.
Added
RESULTS OF OPERATIONS A detailed comparison of the Company’s 2024 operating results to its 2023 operating results can be found in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in the Company’s Annual Report on Form 10-K filed on February 13, 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+2 added−1 removed5 unchanged
Biggest change(in millions, except for percentages) December 31, 2024 Brazilian Real (21) % $ (38) Euro (6) % $ (17) Chinese Renminbi (3) % $ (12) British Pound (2) % $ (9) Korean Won (13) % $ (4) (in millions, except for percentages) December 31, 2023 Euro 3 % $ 58 British Pound 5 % $ 28 Brazilian Real 9 % $ 14 India Rupee 1 % $ 7 Chinese Renminbi (3) % $ (14) For additional information regarding the level of business outside the United States, which is subject to foreign currency exchange rate market risk, refer to Note 22, “Reportable Segments and Related Information,” to the Consolidated Financial Statements in Item 8 of this Form 10-K. 40 Table of Contents Commodity Price Risk Commodity price risk is the possibility that the Company will incur economic losses due to adverse changes in the cost of raw materials used in the production of its products.
Biggest change(in millions, except for percentages) December 31, 2025 Euro 13 % $ 55 British Pound 8 % $ 28 Chinese Renminbi 4 % $ 22 Brazilian Real 12 % $ 17 (in millions, except for percentages) December 31, 2024 Brazilian Real (21) % $ (38) Euro (6) % $ (17) Chinese Renminbi (3) % $ (12) British Pound (2) % $ (9) Korean Won (13) % $ (4) For additional information regarding the level of business outside the United States, which is subject to foreign currency exchange rate market risk, refer to Note 24, “Reportable Segments and Related Information,” to the Consolidated Financial Statements in Item 8 of this Form 10-K.
For quantitative disclosures about market risk, refer to Note 14, “Financial Instruments,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for information with respect to currency exchange rate risk and commodity purchase price risk.
For quantitative disclosures about market risk, refer to Note 16, “Financial Instruments,” to the Consolidated Financial Statements in Item 8 of this Form 10-K for information with respect to currency exchange rate risk and commodity purchase price risk.
As of December 31, 2024 and 2023, the Company deferred a pre-tax loss of $11 million and $6 million, respectively, for the designated net investment hedge within the cumulative translation account within accumulated other comprehensive income, a component of total shareholders’ equity.
As of December 31, 2025 and 2024, the Company deferred a pre-tax loss of $6 million and $11 million, respectively, for the designated net investment hedge within the cumulative translation account within accumulated other comprehensive income, a component of total shareholders’ equity.
Although the Company generally uses the national or regional currency as the functional currency of its local entities, the Company has a significant amount of transactions in non-functional currency denominations including U.S. Dollar, Euro, Chinese Renminbi, Great British Pound and Mexico Peso.
Although the Company generally uses the national or regional currency as the functional currency of its local entities, the Company has a significant amount of transactions in non-functional currency denominations including U.S. Dollar, Euro, Chinese Renminbi, British Pound and Mexican Peso.
As of December 31, 2024 and 2023, the Company had no outstanding commodity swap contracts. Disclosure Regarding Forward-Looking Statements The matters discussed in this Item 7 include forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Information” at the beginning of this Form 10-K. 41 Table of Contents
Disclosure Regarding Forward-Looking Statements The matters discussed in this Item 7 include forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Information” at the beginning of this Form 10-K. 42 Table of Contents
Currency translation adjustments, including the impact of the net investment hedges discussed above, during the years ended December 31, 2024 and 2023, are shown in the following tables, which provide the percentage change in U.S. Dollars against the respective currencies and the approximate impacts of these changes recorded within other comprehensive income (loss) for the respective periods.
Currency translation adjustments, including the impact of the net investment hedges discussed above, during the years ended December 31, 2025 and 2024, are shown in the following tables, which provide the percentage change 41 Table of Contents in U.S.
The Company uses long-term contracts, cost sharing arrangements, design changes, customer buy programs, and limited financial instruments to help control costs wherever beneficial. Commodity forward and option contracts are occasionally executed to offset exposure to potential change in prices mainly for various non-ferrous metals and natural gas consumption used in the manufacturing of vehicle components.
Commodity forward and option contracts are occasionally executed to offset exposure to potential change in prices mainly for various non-ferrous metals and natural gas consumption used in the manufacturing of vehicle components. As of December 31, 2025 and 2024, the Company had no outstanding commodity swap contracts.
Foreign currency exposures are reviewed periodically, and any natural offsets are considered prior to entering into a derivative financial instrument.
Foreign currency exposures are reviewed periodically, and any natural offsets are considered prior to entering into a derivative financial instrument. The Company mitigates its currency exchange rate risk by establishing production facilities and sourcing raw materials in the same region that products are sold to customers.
Removed
The Company mitigates its currency exchange rate risk by establishing local production facilities and related supply chain participants in the markets it serves, by invoicing customers in the same currency as the source of the products and by funding some of its investments in foreign markets through local currency loans.
Added
Dollars against the respective currencies and the approximate impacts of these changes recorded within other comprehensive income (loss) for the respective periods.
Added
Commodity Price Risk Commodity price risk is the possibility that the Company will incur economic losses due to adverse changes in the cost of raw materials used in the production of its products. The Company uses long-term contracts, cost sharing arrangements, design changes, customer buy programs, and limited financial instruments to help control costs wherever beneficial.

Other PHIN 10-K year-over-year comparisons