PHIN

• Strategic Acquisition

• FINIA entered a definitive agreement to acquire Stoba Group, a global high-precision components and solutions provider, for an enterprise value of approximately 6x Stoba's run-rate adjusted EBITDA.
• On a third-party basis, Stoba is expected to add ~$80 million in annual revenue and ~$25 million in adjusted EBITDA (31% margin). Intercompany sales to existing FINIA operations will be eliminated upon consolidation.
• The acquisition expands FINIA's exposure to off-highway, industrial, aerospace and defense, and semiconductor equipment markets, adds an aerospace & defense-qualified manufacturing location in Germany, and strengthens the company's supply chain via vertical integration. The deal is expected to close in Q4 2026, funded via existing liquidity, and is projected to be accretive to annual adjusted EBITDA margin by ~40 basis points.

• Operational & New Business Highlights

• The company delivered year-over-year growth in both core segments, with demand supported by steady replacement cycle fundamentals and positive trends in the commercial vehicle industry. Notable new business wins included a heated tip MPFI system for alternative fuel light passenger vehicles, a 24-volt startup program for Class A commercial vehicles, and a complete common rail fuel system for agricultural off-highway applications.
• The aftermarket segment delivered consistent results, driven by an aging global vehicle fleet. During H1 2026, FINIA added over 2,650 new SKUs and 150,000 new cross-references globally, expanded distribution across EMEA, North Africa, Eastern Europe, the Americas, Asia, and Oceania, and grew its independent aftermarket footprint.
• Key new product launches included a 500-bar GDI system for advanced gasoline applications, a new fuel delivery module for the Indian commercial vehicle market, and a next-generation GDI pump for light vehicle applications.

• Capital Allocation & Balance Sheet

• FINIA maintains a disciplined balanced capital allocation strategy focused on investing in organic growth, pursuing strategic accretive acquisitions, maintaining a strong balance sheet, and returning capital to shareholders. The company ended the quarter with $370 million in cash and $820 million in total liquidity, with a net leverage ratio of 1.3x, below the 1.5x target.
• In Q2 2026, the company returned $53 million to shareholders via $42 million in share repurchases and $11 million in dividends. Since its July 2023 spinoff through Q2 2026, FINIA has returned $665 million to shareholders via buybacks and dividends, while retaining strong balance sheet flexibility.
• The acquisition of Stoba is not expected to change the company's ongoing capital return commitments to shareholders.

FINIA refined its full-year 2026 guidance, maintaining the prior midpoint of the revenue range while adjusting the overall range and updating other financial outlooks:

• Revenue: Full-year net sales guidance is maintained at a range of $3.57 billion to $3.67 billion, representing mid-single-digit year-over-year growth including foreign exchange impacts. Excluding FX, revenue growth is projected to be in the low single-digit range. The adjusted range reflects a modest tightening of the prior guidance band, with no change to the midpoint.
• Adjusted EBITDA: Full-year adjusted EBITDA guidance is set at $485 million to $515 million, translating to an adjusted EBITDA margin of 13.5% to 14.1%. The guidance accounts for slight margin dilution from FX impacts, net tariff recoveries, and product mix.
• Adjusted Free Cash Flow: Full-year adjusted free cash flow guidance is updated to $210 million to $250 million, representing a $10 million increase from prior guidance, driven by improved working capital management, lower-than-targeted capital expenditures, and lower effective cash tax rates.
• Adjusted Tax Rate: The full-year adjusted tax rate is guided to 30% to 33%, reflecting progress addressing legacy tax structure headwinds.
• All guidance excludes potential impacts from the Stoba acquisition, future changes to government policy, tariffs, or other unforeseen risks outlined in FINIA's SEC filings.

For Q2 2026, FINIA reported total net sales of $940 million, up 5.6% year-over-year. There are two core operating segments:

1. Fuel Systems Segment: Delivered sales of $584 million, representing 62.1% of total net sales, with 5% year-over-year sales growth. Adjusted operating margin for the segment was 11%.
2. Aftermarket Segment: Recorded sales of $356 million, representing 37.9% of total net sales, with 6.6% year-over-year sales growth. Adjusted operating margin for the segment was 17.1%. The recently acquired SEM business contributed $18 million in sales and $3 million in adjusted EBITDA (16.6% margin) in the quarter. Total segment adjusted operating income across all segments was $125 million, for an overall 13.3% margin. Adjusted EBITDA for the company was $130 million, representing a 13.8% overall margin.

• Ongoing geopolitical uncertainty, trade policy volatility, and potential changes to tariff rules could alter revenue assumptions and cost structures; while the company is currently receiving net tariff refunds, half of these refunds must be passed through to customers, creating a modest headwind to reported revenue.

• Weakness in the China light vehicle market, which is currently down mid-teens year-over-year, acts as a partial offset to stronger-than-expected performance in the global commercial vehicle segment.
• M&A activity carries inherent integration risks, including the need to achieve projected cost synergies and align operational processes, controls, and systems with existing FINIA operations.
• Stoba's existing third-party customer base includes some peers and competitors of FINIA, requiring IP firewalling and creating modest customer concentration risk, though management does not view this as a material concern.

Q: Full-year guidance was adjusted despite a positive macro backdrop with stronger commercial vehicle demand. What explains the guidance revision, and how does underlying demand look across regions?

A: Management kept the overall revenue guidance midpoint flat, with no material change to the full-year outlook. Stronger commercial vehicle demand is partially offset by unexpected mid-teens weakness in China's light vehicle market. Additionally, $7 million in expected tariff refunds that must be passed through to customers reduces reported revenue, an impact not included in the original guidance, which accounts for the modest tightening of the guidance range.

Q: What drove the decision to acquire Stoba, and how should we model the synergies and EBITDA contribution from the deal?

A: Stoba was a long-time key supplier to FINIA, and the acquisition solidifies the company's supply chain, brings in unique advanced precision manufacturing capabilities, and expands FINIA's addressable market into new high-growth sectors including aerospace & defense and semiconductor equipment components. The $80 million third-party revenue and $25 million EBITDA estimate already accounts for expected synergies, including $15 million in vertical integration cost savings from eliminating third-party supplier markup, and will be accretive to margin. Management sees additional long-term upside from new customer growth opportunities.

Q: Will the Stoba acquisition lead to a slowdown in share repurchases, given the company's prior history of strong capital returns?

A: Management confirmed the acquisition will not change its existing capital allocation strategy. FINIA ended Q2 with a net leverage ratio of 1.3x, well below its 1.5x target, and Stoba adds incremental run-rate EBITDA that further supports leverage capacity. The company will continue opportunistic share repurchases alongside dividend payments with no material change to its current approach.

Q: Is Stoba part of an ongoing M&A pipeline, or should investors expect a lull in deal activity after this acquisition?

A: Management noted that discussions with Stoba took roughly a year from initial talks to closing, consistent with typical M&A timelines. The company maintains a robust active pipeline of additional tuck-in acquisition targets aligned with its strategic focus on expanding commercial vehicle, off-highway, industrial, and aftermarket exposure. Management will continue pursuing deals that meet its valuation and strategic criteria, and does not expect a lull in M&A activity.