Auto supplier Phinia's stock gains in debut on NYSE
Phinia, which makes parts for internal combustion engines including fuel tanks, alternators and starters, counts Delphi, Delco Remy and Hartridge among its brands. The new company was split off from BorgWarner so the legacy supplier could focus solely on electrification.
"Today is a very exciting day as we begin this new chapter as an independent business," Phinia CEO Brady Ericson, who was previously chief strategy officer for BorgWarner, said in a news release. "With our focused strategy, scale, talented workforce, and strong financial resources, this move gives us the freedom to grow our business and create value for our customers, employees and shareholders."
The company's strong margins, healthy cash flow and low debt leverage make it attractive to shareholders seeking "profitable growth, competitive dividends and opportunistic share repurchases," Chris Gropp, VP and CFO, said in the release.
Investors have generally rewarded automotive companies that have gone full throttle on EVs, such as BorgWarner. Phinia's long-term value proposition is that a carbon-neutral future will not be achieved merely by battery electric vehicles, according to Ericson. Rather, more efficient gas engines and clean energy such as hydrogen will also play a pivotal role in the push for environmental sustainability.
"Our strategy centers around developing sustainable solutions for internal combustion engines and leveraging our technology for alternative fuels which we believe will rapidly become a key contributor on our journey to carbon neutrality," he said. "Our vision of a sustainable future includes a wide range of solutions including carbon-neutral and carbon-free fuels."
BorgWarner first announced the spinoff in December and set a completion date last month. The company is made up of 12,900 employees across 44 locations in 20 countries. The spinoff is not expected to result in any major changes to real estate footprints or employee counts, BorgWarner CEO Frederic Lissalde told Crain's in May.
Untethering EV from internal combustion would allow each business to function more efficiently, he said.
"BorgWarner's strategy is going to be all about battery electric vehicles and high-voltage plug-in hybrids," Lissalde said. "There is no 'e' in Phinia. The 'e' is in BorgWarner."
Source: Crain's Detroit Business
