Drew Estes's questions to Phinia Inc (PHIN) leadership • Q4 2024
Question
Drew Estes from Banyan Capital Management followed up on the tax issue, asking for clarification on the 'structurally difficult' regions, and also inquired about the company's maintenance capital expenditure level in a steady-state scenario.
Answer
CFO Chris Gropp and CEO Brady Ericson clarified the tax issue stems from inefficient legal and holding company structures inherited from the spin-off, not the manufacturing footprint. Unwinding these requires complex legal and IP moves. Ericson estimated maintenance CapEx would be around 1% of sales but emphasized that continuous investment is required to refresh programs and maintain revenue, making a pure maintenance scenario unrealistic.