Core Viewpoint - BorgWarner is positioned to potentially continue its earnings-beat streak in upcoming reports, having surpassed earnings estimates consistently in recent quarters [1][5]. Earnings Performance - In the most recent quarter, BorgWarner reported earnings of $0.98 per share, missing the expected $1.11 per share by 13.27%. In the previous quarter, it exceeded the consensus estimate of $0.92 per share by reporting $1.01 per share, resulting in a surprise of 9.78% [2]. Earnings Estimates and Predictions - BorgWarner's earnings estimates have been trending higher, supported by its history of earnings surprises. The company currently has a positive Zacks Earnings ESP of +11.20%, indicating bullish sentiment among analysts regarding its earnings prospects [5][8]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with historical data showing that stocks with this combination beat estimates nearly 70% of the time [6][8]. Earnings ESP Explanation - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions. This metric is crucial for predicting earnings performance [7][9].

Core Points - BorgWarner has been recognized in the second edition of the World's Most Sustainable Companies 2025 by TIME and Statista Inc, highlighting its commitment to sustainability [1][2] - The recognition is based on over 20 key performance indicators related to sustainability, with BorgWarner being among the top 500 out of over 5,000 assessed companies [2][3] Company Overview - BorgWarner has over 130 years of experience as a global product leader in mobility innovation, focusing on sustainability to create a cleaner and safer future [4]

Core Viewpoint - The article discusses the recent performance and outlook of BorgWarner (NYSE: BWA), indicating that despite shares being at similar levels, it is an appropriate time to revise the investment thesis following the company's first quarter results and management updates [1]. Summary by Relevant Sections - The company has been under coverage since earlier this year, and the current share price remains stable, prompting a reassessment of the investment thesis [1]. - The first quarter results have been reported, which may provide insights into the company's performance and future prospects [1].

Core Insights - BorgWarner Inc. is a transformative global product leader with over 130 years of experience in mobility innovation [1] - The company is focused on accelerating the transition to eMobility, aiming to contribute to a cleaner, healthier, and safer future [1] Company Information - BorgWarner will hold its 2025 Second Quarter Results Conference Call on July 31, 2025, at 9:30 am Eastern Time [2] - The conference call will be accessible live over the Internet via the company's investor relations website [2]

Summary of BorgWarner Conference Call Company Overview - **Company**: BorgWarner - **Industry**: Automotive components, focusing on powertrain and electrification technologies Key Financial Metrics - **First Quarter Performance**: - Outgrowth of nearly 4% above industry production - Operating margin at approximately 10% - Free cash flow of about $270 million, an increase from the prior year [2][6][88] Tariff Impact and Mitigation - **Tariff Impact**: Initially projected at 1.6% of sales, but has decreased due to effective mitigation strategies and changes in executive orders [3][4] - **Customer Engagement**: Actively working with customers to recover tariff costs [4][6] Industry Production Concerns - **U.S. Market Risks**: Concerns about potential impacts of tariffs on industry production in Q3 and Q4, though current visibility remains strong for Q2 [5][9] Regional Insights - **North America**: - Market expectations adjusted from a decline of 1-3% to 2-4% due to tariff concerns, but Q2 volumes remain strong [8][10] - **Europe**: - Strong demand for e-products, with regulatory clarity on emissions potentially increasing demand for foundational products [16][17] - **China**: - Significant exposure with 20% of overall revenue; local OEMs represent 75% of revenue in China, showing strong performance [18][19] Electrification Trends - **Adoption Rates**: Vary by region, with China leading in BEV adoption, followed by Europe, while North America is expected to grow slower [22][24] - **Hybrid Vehicles**: Increasing opportunities in North America for both foundational and e-products, particularly in hybrid segments [30][31] Market Share and Competition - **Market Dynamics**: Anticipated consolidation in the market as smaller players struggle to compete, potentially increasing BorgWarner's market share [43][44] Capital Allocation Strategy - **M&A Criteria**: Focus on industrial logic, accretive assets, and fair pricing; disciplined approach to potential acquisitions [56][59] - **Capital Utilization**: Emphasis on balancing organic and inorganic investments, stock repurchases, and dividends over a five-year horizon [60] Operational Efficiency - **Margin Management**: Sustained performance with margins above 10% for the last four quarters; focus on cost structure and operational excellence [49][50] - **AI and Automation**: Exploring opportunities for increased efficiency through robotics and AI in manufacturing processes [52][55] Free Cash Flow Generation - **Cash Flow Goals**: Projected midpoint of $700 million for the year; focus on using cash flow for accretive investments or returning capital to shareholders [88][89] Conclusion - **Outlook**: Positive sentiment regarding operational strength, market growth, and the ability to generate free cash flow, with a commitment to outgrowing the industry and enhancing shareholder value [84][88]

Summary of BorgWarner (BWA) 2025 Conference Call Company Overview - **Company**: BorgWarner (BWA) - **Date**: June 11, 2025 - **Key Focus**: Strong performance in Q1, managing tariff impacts, and growth in electric and foundational product portfolios Key Points Financial Performance - **Q1 Results**: Strong outgrowth of nearly 4% above industry production, operating margin at approximately 10%, and free cash flow of about $270 million above the prior year [2][3][4] - **Tariff Impact**: Initially projected a 1.6% impact on sales due to tariffs, but this has decreased due to effective mitigation strategies and changes in executive orders [4][5] - **Concerns**: Industry production in the U.S. remains a concern, particularly for Q3 and Q4, but current visibility shows strong performance in Q2 [6][9] Market Dynamics - **Regional Insights**: - **North America**: Initially expected a decline of 1% to 3% in market production, revised to 2% to 4% down, but Q2 remains strong [8][9] - **Europe**: Strong demand for e-products, with clarity on emission regulations potentially increasing demand for foundational products [15][16] - **China**: Significant exposure with 20% of overall revenue, strong performance in both e-products and foundational products [17][18] Product Strategy - **Electrification Trends**: Adoption rates for electrified vehicles vary by region, with China leading in BEV adoption. North America is expected to grow slower in electrification [20][22] - **Hybrid Vehicles**: Increasing opportunities for hybrids in North America, with a focus on both foundational and e-products [25][26] - **Turbos and Efficient Engines**: Continued demand for efficient propulsion systems, with a focus on turbos and all-wheel drive products [33][34] Operational Efficiency - **Cost Management**: Sustained performance with a focus on competitive cost structures, supply chain savings, and operational excellence [42][44] - **Capital Allocation**: A balanced approach to capital allocation, focusing on organic and inorganic investments, stock repurchases, and dividends [50][54] Future Outlook - **M&A Strategy**: Disciplined approach to M&A, focusing on industrial logic and accretive assets, with ongoing evaluation of potential targets [50][53] - **Free Cash Flow Generation**: Expected midpoint of $700 million in free cash flow for the year, with plans to utilize this for shareholder value creation [78][79] Additional Insights - **Operational Model**: The company's unique operating model promotes accountability and resilience, contributing to strong free cash flow and margin performance [75][76] - **Market Share Dynamics**: Anticipation of market consolidation as smaller players may struggle, providing opportunities for BorgWarner to increase market share [36][38] Conclusion BorgWarner is positioned well with strong financial performance, effective management of tariff impacts, and a strategic focus on electrification and hybrid vehicles. The company aims to leverage its operational strengths and free cash flow generation to drive shareholder value while navigating the evolving automotive landscape.

Summary of BorgWarner (BWA) Conference Call - June 10, 2025 Company Overview - **Company**: BorgWarner (BWA) - **Industry**: Automotive Powertrain and Electrification Key Points and Arguments Financial Performance - BorgWarner reported strong performance in Q1, outpacing end market growth with strong margins and free cash flow [2][3] - The company is focused on driving financial performance despite headwinds, including tariffs and customer demand uncertainties [3][5] Tariff Impact - The estimated gross impact of tariffs on sales is about 1.6%, which is better than previous estimates [4][30] - Tariffs are considered manageable, with the main concern being customer demand and production environment uncertainties [4][30] - BorgWarner is actively working to mitigate tariff impacts through compliance and sourcing strategies [26][52] Regional Market Trends - In China, NEVs (New Energy Vehicles) account for 50% of the market, with BorgWarner generating 20% of its revenue from this region [10][18] - The company has a strong customer base in China, with 75% of revenue coming from OEMs [11] - In Europe, electrification is growing but at a slower pace compared to China, with expectations of continued growth [12][39] Product Portfolio and Strategy - BorgWarner has a diversified product portfolio catering to combustion, hybrid, and electric vehicles [9][12] - The company aims to outgrow its end markets across both foundational and electrified businesses [42][61] - Recent decisions include exiting the EV charging business due to underperformance and consolidating North American battery systems [48][51] Capital Allocation and M&A Strategy - BorgWarner maintains a balanced capital allocation approach, focusing on dividends, share repurchases, and M&A opportunities [75][76] - The company has $1.7 billion in cash and projects generating $700 million in free cash flow [75] - M&A targets are evaluated based on industrial logic, near-term profitability, and proper valuation [77][82] Market Resilience and Future Outlook - BorgWarner's management expresses confidence in navigating market uncertainties, emphasizing the resilience of their business model [35][39] - The company expects to maintain margins in foundational businesses while pursuing growth in electrified products [64][66] Competitive Landscape - The automotive industry is expected to see consolidation, particularly among smaller players in the e-product segment [90][91] - BorgWarner is well-positioned to capitalize on opportunities arising from the weakening of smaller competitors [90][91] Additional Important Insights - The company is focused on operational excellence and cost management to remain competitive [55][56] - There is a strong emphasis on customer diversification, reducing dependency on any single customer [19][20] - The management team is experienced in navigating various market challenges, including tariffs and production volatility [35][36]

Core Viewpoint - BorgWarner shares have increased by approximately 3.3% over the past month, underperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Earnings Estimates - Fresh estimates for BorgWarner have trended downward over the past month, indicating a negative outlook [2][4] VGM Scores - BorgWarner has a Growth Score of B and a Momentum Score of C, but it received an A for Value, placing it in the top quintile for this investment strategy. The overall aggregate VGM Score is A, which is significant for investors not focused on a single strategy [3] Industry Performance - BorgWarner is part of the Zacks Automotive - Original Equipment industry. Competitor Magna has seen a 4.7% increase in shares over the past month, despite reporting revenues of $10.07 billion for the last quarter, which reflects an 8.2% year-over-year decline [5] - Magna's expected earnings for the current quarter are $1.14 per share, representing a 15.6% decrease from the previous year, with a Zacks Consensus Estimate change of -0.6% over the last 30 days. Magna also holds a Zacks Rank 3 (Hold) and has a VGM Score of A [6]

Core Insights - The automotive parts industry is experiencing a divergence in performance in Q1 2025, with some companies showing improvement while others continue to struggle after significant profit declines in 2024 [1][2] Financial Performance Overview - **Magna**: Q1 revenue decreased by 8% to 100.69 billion RMB, but net profit surged from 9 million USD to 146 million USD, exceeding market expectations [2][4] - **Faurecia**: Achieved Q1 revenue of 67 billion RMB, a 2.6% increase, driven by growth in automotive electronics and seating divisions [3] - **Lear**: Reported a 7% decline in revenue to 55.6 billion RMB and a 26% drop in net profit, leading to the withdrawal of its 2025 financial forecast [5] - **Valeo**: Q1 revenue was 53.13 billion RMB, down 2%, primarily due to asset divestitures [10] - **LG Energy**: Turned a profit with Q1 revenue of 6.265 trillion KRW, a 2.2% increase, and net profit of 227 billion KRW, a 7% rise [7] - **Aptiv**: Revenue fell by 1.6% to 48.25 billion RMB, but operating profit increased by 7% to 4.48 billion RMB [4] Challenges and Strategic Responses - **Tariff Impact**: The introduction of a 25% tariff on imported vehicles and key automotive parts has prompted companies to negotiate cost pass-throughs with clients [9][10] - **Cost Management**: Companies like Magna and Faurecia are implementing cost-cutting measures and restructuring to mitigate the financial impact of tariffs [9][11] - **Operational Adjustments**: Lear is undergoing aggressive restructuring, including workforce reductions and automation to improve efficiency [5] - **Market Adaptation**: Companies are actively seeking to optimize supply chains and adjust production resources to manage tariff costs effectively [11][12]

Core Points - Isabelle McKenzie, Vice President and President and General Manager of Drivetrain and Morse Systems at BorgWarner, has been recognized as one of the 100 Leading Women in the North American Auto Industry by Automotive News [1][2] - The recognition highlights female leaders who have significant influence and make major decisions within their companies [3] - This year's list includes a diverse group of executives, including engineers, mobility leaders, and marketing executives, showcasing the breadth of female leadership in the automotive sector [3] Company Overview - BorgWarner has been a transformative global product leader in the automotive industry for over 130 years, focusing on mobility innovation and sustainability [7] - Isabelle McKenzie has been with BorgWarner since 2014, holding various leadership roles and contributing to the company's growth and innovation in the automotive sector [4] - The Automotive News list has honored a total of 442 executives over the past 25 years, reflecting the increasing representation of women in leadership positions within the industry [5][6]