2024-05-17 10:35:00 ET
Summary
- Phinia, a spin-off from BorgWarner, focuses on fuel systems and after-market businesses.
- The CEO's compensation is tied to economic value added and free cash flow, reflecting a focus on capital allocation.
- The company's profits are diversified, with half coming from the aftermarket business and a minority from commercial vehicles.
The following segment was excerpted from this fund letter.
Phinia ( PHIN )
Phinia was a spin-off from BorgWarner ( BWA ) and consists of that company’s fuel systems and after-market businesses. What attracted me to do further work was the language that management used on their calls. For example, here is what the CEO said on a recent call about executive compensation:
“... we are managing the business with a laser focus on generating economic value, or EV, and free cash flow. The 2024 annual cash incentive will be based on the company's achievement of two equally weighted performance metrics; EV and free cash flow. This program sends a clear message throughout our organization that investment decisions are made through the lens of earning an adequate return on capital. Our 2024 long-term equity incentive will be solely based on the company's relative total shareholder returns compared to that of a peer group company.”
Read the full article on Seeking Alpha
For further details see:
Silver Ring Value Partners - Phinia: Capable Of Low Single-Digit Growth But Being Priced As A Declining Business