Oct 29, 2026 earnings call — Record earnings and STOBA acquisition closing
Recorded a record adjusted EBITDA of $135 million, margin 14.8%.
Revenue $0.9B (est $0.9B) · EPS $1.83 (est $1.68) · Next-quarter revenue outlook $3.6B
Key quotes
"We have returned $76 million to shareholders in the form $65 million of share repurchases, $11 million of dividends."
"Finally, we announced the closing of the STOBA Group acquisition as of October 1, 2026, want to give a warm welcome to the newest members of the PHINIA family."
"This will extend our technology into alternative fuels and industrial off highway applications for the Chinese market."
Analyst Q&A 4
A&D program wins and guidance lift
Q (Bobby Brooks · Northland): He asked for an update on diversification in aerospace & defense: how many programs and customers, how the current programs have gone, and timing of the next programs into production. He also asked how much of the guidance lift came from STOBA versus the base business, and about growth initiatives for 2027.
A: They are now quoting and working with customers on 13 different programs and with 8 or 10 different customers, and expect more decisions in Q4 and early 2027. STOBA adds 2 A&D-certified locations and expands their product portfolio, but less than 0.5% of the guidance adjustment is related to STOBA on both revenue and EBITDA; the bulk of the increase was organic driven by CV strength and stronger-than-expected Q3 launches. They have won 4 programs (3 aerospace, 1 drone): 2 are in production, a third launches end of this year, and the fourth goes into production early to mid next year; they see CV in North America and Europe staying strong into 2027.
"We are now quoting and working with customers on 13 different programs, and it was 8 different customers." — Brady D. Ericson (CEO)
Tariff recoveries and capital plans
Q (Jake Scholl · BNP): He asked how much tariffs and recoveries affected Q3 and the guide, and what part of 2026 recoveries will not repeat in 2027. He also asked how management will allocate capital after closing STOBA — more M&A or more buybacks?
A: In the quarter the sell-side impact was $21 million, of which $7 million is non-repeat; on a $3 million profit benefit, $1 million is nonrecurring. Year-to-date changes on sales are $16 million with about half one-off; recoveries are largely caught up and going into Q4 this is largely baked in, so little effect into 2027 if nothing changes. On capital allocation they will review quarterly, keep looking at M&A but remain cautious on fit and valuation, and STOBA does not change their buyback or acquisition decision-making; net leverage was 1.3x at quarter end and they remain in a strong liquidity and leverage position.
"So in the quarter, I mean, you can see on the sell side that it was $21 million and out of that, $7 million of it is non repeat." — Chris Gropp (CFO)
Unrecovered commodity costs
Q (Joe Spak · UBS): He asked how much of the remaining unrecovered commodity and freight costs are already contracted versus still needing negotiation, and whether the unrecovered piece could be a headwind into 2027.
A: They have recovered the majority by contract; the remaining unrecovered amount is mid to low single digit millions and the recovery mechanism is on a longer basis. Management said this will be a tailwind into Q4 and a little into next year, and the amounts are not materially large.
"It will actually be a tailwind going into 2027, Gabriel." — Chris Gropp (CFO)
Why Q4 conversion looks stronger
Q (Joe Spak · UBS): He asked how much of the stronger Q4 conversion is due to lower R&D versus price, cost, productivity, and mix or other factors.
A: R&D is helping: it fluctuates between 2-4% and averages at 3%, and recoveries from customers should keep R&D in the mid-2s in Q4 which helps conversion. Management also said part of the improvement is higher sales from launches and a stronger CV business, and that aftermarket sales did not trail off in Q4 this year, producing a richer aftermarket mix that further improves conversion.
"So the implication is that we are seeing a richer amount of mix volume and mix in the aftermarket." — Chris Gropp (CFO)