Auto supplier Phinia's stock gains in debut on NYSE - Crain's Detroit Business

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By Kurt Nagl

Kurt Nagl is a reporter covering manufacturing — particularly the automotive industry's transition to electrification, the impact on the supply base and what it means for the state — as well as the business of law. Before joining Crain’s Detroit Business, he reported in Iraq and China and for various publications in Michigan.

By Kurt Nagl

Credit: NYSE

Brady Ericson, president and CEO of Phinia, is joined by Chris Taylor, vice president, NYSE Head of Listings and Services, in ringing the stock exchange's opening bell.

July 05, 2023 04:04 PM

Brady Ericson

Phinia Inc., the product of BorgWarner spinning off its fuel systems and aftermarket segment, saw a strong gain in its stock price during its Wednesday debut on the New York Stock Exchange, suggesting investors are still interested in more than just electric.

In its first day of public trading, the Auburn Hills-based automotive supplier (NYSE: PHIN) saw price per share jump more than 20 percent from $29.50 to $36.56 by the closing bell.

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."

By Kurt Nagl

Kurt Nagl is a reporter covering manufacturing — particularly the automotive industry's transition to electrification, the impact on the supply base and what it means for the state — as well as the business of law. Before joining Crain’s Detroit Business, he reported in Iraq and China and for various publications in Michigan.

By Kurt Nagl

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