Financial Data and Key Metrics Changes - In 2025, the company reported approximately $14.3 billion in net sales, an increase of about $200 million year-over-year, supported by a 23% increase in light vehicle e-product sales [5][7] - The adjusted operating margin expanded by 60 basis points to 10.7%, with a 14% growth in EPS year-over-year and over $1.2 billion in free cash flow generated, marking a 66% increase from 2024 [7][28] - The fourth quarter adjusted operating income was $427 million, equating to a 12.0% adjusted operating margin, compared to 10.2% in the previous year [21][22] Business Line Data and Key Metrics Changes - Light vehicle e-product sales drove significant growth, with a 23% increase, while organic sales, excluding the battery and charging system segment, were up approximately 1.6% year-over-year [5][6] - The battery systems business faced a decline of 35%-40% year-over-year, contributing a 150 basis point headwind to overall growth [62] Market Data and Key Metrics Changes - The company expects total 2026 sales in the range of $14.0-$14.3 billion, with a projected organic sales decline of 3.5%-1.5% year-over-year, primarily due to a decrease in the battery business [23][24] - The China market, which constitutes about 20% of the company's overall business, has seen a slowdown in local vehicle sales, but exports from China reached over 7 million last year, indicating potential growth opportunities [94] Company Strategy and Development Direction - The company is focused on long-term profitable growth, with a new product aimed at the data center market expected to generate over $300 million in sales during its first year of production [11][14] - The strategy includes leveraging existing manufacturing capabilities and expanding into new markets, such as power generation, while maintaining a disciplined approach to capital allocation and M&A opportunities [19][70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance, citing a robust pipeline of new product awards and the potential for margin expansion and EPS growth in 2026 despite market challenges [7][19] - The company anticipates that the impact of EV program volume shortfalls will continue into 2026, but expects to see growth from new product launches starting in 2027 [75] Other Important Information - The company returned over 50% of its free cash flow to shareholders in 2025 through share repurchases and dividends, demonstrating a commitment to shareholder value [7][27] - The company has secured a record number of new product awards, indicating strong demand for its foundational and e-product portfolios [17][18] Q&A Session Summary Question: Can you elaborate on the data center opportunity and its margins? - Management indicated that the $300 million revenue target is for the ramp-up year, with a mid-teens incremental conversion expected, and immediate EPS accretion anticipated [33][34] Question: What is the outlook for the PowerDrive segment and the sustainability of growth? - Management noted a 100 basis point benefit in the fourth quarter and expects continued growth in light vehicle e-products in the low double digits for 2026 [36][37] Question: How does the company view the growth potential in the turbocharger market? - Management remains optimistic about growth in the turbo business, citing strong market leadership and ongoing technological advancements [58][59] Question: What is the future of the battery systems business given the current decline? - Management acknowledged the challenges but expressed confidence in the team's ability to minimize losses and adjust the cost structure for future growth opportunities [62][63] Question: How does the company approach M&A in the current market environment? - Management emphasized a disciplined approach to M&A, focusing on opportunities that leverage core competencies and provide near-term accretion [70][72]

Financial Data and Key Metrics Changes - In 2025, the company reported approximately $14.3 billion in net sales, an increase of about $200 million year-over-year, supported by a 23% increase in light vehicle e-product sales [4][5] - The adjusted operating margin expanded by 60 basis points to 10.7%, with a 14% year-over-year growth in EPS and over $1.2 billion in free cash flow generated, representing a 66% increase compared to 2024 [5][24] - The fourth quarter sales reached just under $3.6 billion, with an adjusted operating income of $427 million, equating to a 12.0% adjusted operating margin, up from 10.2% in the previous year [17][18] Business Line Data and Key Metrics Changes - Light vehicle e-product sales drove significant growth, with a 23% increase, while organic sales growth was approximately 1.6% year-over-year, excluding declines in the battery and charging system segment [4][5] - The PowerDrive Systems segment saw substantial e-product growth, contributing to the overall performance, with expectations for continued growth in the low double digits for 2026 [34][35] Market Data and Key Metrics Changes - The company anticipates a sales decline in the battery business due to reduced North American incentives and weaker European demand, representing a 150 basis point headwind to year-over-year sales growth [19][59] - The China market, which constitutes about 20% of overall business, is experiencing a slowdown in local vehicle sales, but exports from China have reached record highs, providing opportunities for growth [76] Company Strategy and Development Direction - The company is focused on long-term profitable growth, with a new product aimed at the data center market expected to generate over $300 million in sales during its first year of production, starting in 2027 [9][11] - The strategy includes leveraging core competencies in manufacturing and technology to secure new business awards and expand into new markets, such as power generation [14][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to expand margins and grow adjusted EPS in 2026, despite anticipated declines in market volumes and battery sales [16][25] - The company is optimistic about future product launches and the potential for growth in both foundational and e-product segments, with expectations for improved performance starting in 2027 [66] Other Important Information - The company returned over 50% of its free cash flow to shareholders in 2025 through share repurchases and dividends, demonstrating a balanced capital allocation approach [5][22] - The company has repurchased over 31 million shares since 2021, representing a 13% reduction in outstanding shares [22] Q&A Session Summary Question: Can you elaborate on the data center opportunity and its margins? - The company expects a mid-teens incremental conversion on the $300 million in revenues from the data center business, which is anticipated to be EPS accretive immediately [30][31] Question: What is the size of the recovery in the PowerDrive segment? - The PowerDrive Systems segment saw about 100 basis points of benefit in Q4, with expectations for continued growth in the mid-teens for 2026 [34][35] Question: How does the company view the growth potential of the turbine generator system? - The data center market is expected to grow in the mid-teens annually for the next decade, with the turbine generator system positioned to capture significant market share [40][41] Question: What is the outlook for the battery systems business? - The battery systems business is expected to face a 150 basis point headwind in 2026, but management is optimistic about future growth opportunities and cost structure adjustments [59] Question: How does the company approach M&A opportunities? - The company remains disciplined in its M&A strategy, focusing on acquisitions that leverage core competencies and provide near-term accretion [63][64]

Financial Data and Key Metrics Changes - BorgWarner reported approximately $14.3 billion in net sales for 2025, an increase of about $200 million year-over-year, supported by a 23% increase in light vehicle e-product sales [4][5] - The adjusted operating margin expanded by 60 basis points to 10.7%, despite a 20 basis points net tariff headwind [5][15] - The company achieved a 14% year-over-year growth in EPS and generated over $1.2 billion in free cash flow, a 66% increase compared to 2024 [5][19] Business Line Data and Key Metrics Changes - Light vehicle e-product sales increased by 23%, contributing significantly to overall sales growth [4][5] - Organic sales growth was approximately 1.6% year-over-year when excluding the decline in the battery and charging system segment [4] - The battery systems business experienced a revenue decline of 35%-40% year-over-year, primarily due to challenges in North America and weaker demand in Europe [40][41] Market Data and Key Metrics Changes - The company expects its light vehicle business, which comprises over 80% of sales, to perform broadly in line with the weighted light vehicle market, which is projected to be flat to down 3% for 2026 [20][22] - The battery business is anticipated to represent a 150 basis point headwind to year-over-year sales growth due to a lack of North American incentives and weaker European demand [21][41] Company Strategy and Development Direction - BorgWarner is focusing on long-term profitable growth by investing in new product developments, including a Turbine Generator System for the data center market [6][10][16] - The company secured a record number of new product awards across its foundational and e-product portfolios, indicating a robust pipeline for future growth [5][16] - The strategic focus includes leveraging core competencies and exploring inorganic opportunities to enhance capabilities and shareholder value [44][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to expand margins, grow adjusted EPS, and generate strong free cash flow in 2026, despite anticipated declines in markets and battery sales [5][16][27] - The company expects to see top-line benefits from new product launches starting in 2027 and beyond, driven by recent business wins [34][47] - Management acknowledged the challenges in the EV market but remains optimistic about future growth opportunities from new product developments [34][46] Other Important Information - BorgWarner announced a Master Supply Agreement with TurboCell for the Turbine Generator System, expected to generate over $300 million in sales during the first year of production [10][12] - The company has repurchased over $400 million of its stock in the second half of 2025, returning approximately 52% of free cash flow to shareholders [24][25] Q&A Session Summary Question: Can you elaborate on the data center opportunity and its margins? - Management indicated that the $300 million in revenues from the data center business is expected to have a mid-teens incremental conversion margin, consistent with the automotive business [29] Question: What is the size of the recovery in the PowerDrive segment? - Management noted a 100 basis point benefit in the fourth quarter, with expectations for continued growth in light vehicle e-products in the low double digits for 2026 [30][31] Question: What is the outlook for the battery systems business? - The battery systems business is expected to face continued sales headwinds, with management taking actions to minimize losses and adjust the cost structure [40][41] Question: How does the company view its M&A strategy in light of current market conditions? - Management emphasized a disciplined approach to M&A, focusing on acquisitions that leverage core competencies and provide near-term accretion [44][45]

Q4 & FY 2025 Earnings Call Presentation February 11, 2026 Update pic Forward-Looking Statements This presentation may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that are based on management's current outlook, expectations, estimates and projections. Words such as "anticipates," "believes," "continues," "could," "designed," "effect," "estimates," "evaluates," "expects," "forecasts," "goal," "guidance," "initiative," "intends," "may," "outlook," "pl ...

Core Viewpoint - BorgWarner reported quarterly earnings of $1.35 per share, exceeding the Zacks Consensus Estimate of $1.16 per share, and showing an increase from $1.01 per share a year ago, representing an earnings surprise of +16.70% [1] Financial Performance - The company achieved revenues of $3.57 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 1.72%, and up from $3.44 billion year-over-year [2] - Over the last four quarters, BorgWarner has consistently surpassed consensus EPS estimates four times and topped revenue estimates three times [2] Stock Performance - BorgWarner shares have increased approximately 19.8% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.4% [3] Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates at $1.19 for the coming quarter and $5.06 for the current fiscal year [4][7] - The estimate revisions trend for BorgWarner was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Automotive - Original Equipment industry, to which BorgWarner belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting that the industry's outlook could materially impact the stock's performance [8]

Financial Performance - U.S. GAAP net sales for 2025 were $14,316 million, an increase of 1.6% compared to 2024[12]. - Adjusted net earnings per diluted share for 2025 were $4.91, up approximately 14% compared to 2024[4]. - Operating cash flow increased to $1,648 million, up approximately 19% compared to 2024[4]. - Free cash flow increased to $1,208 million, up approximately 66% compared to 2024[4]. - BorgWarner reported net sales of $3,572 million for Q4 2025, a 3.9% increase from $3,439 million in Q4 2024[20]. - Adjusted operating income for 2025 was $1,537 million, compared to $1,417 million in 2024, reflecting a year-over-year increase of 8.5%[36]. - The company reported a net sales increase to $14,316 million in 2025 from $14,086 million in 2024, marking a growth of 1.6%[39]. Cash Flow and Capital Expenditures - Net cash provided by operating activities from continuing operations increased to $1,648 million in 2025 from $1,382 million in 2024, representing a growth of 19.3%[25]. - Free cash flow for the year ended 2025 was $1,208 million, up from $729 million in 2024, indicating a significant increase of 65.5%[37]. - Capital expenditures for 2025 were $469 million, down from $671 million in 2024, indicating a reduction of 30.1%[25]. - The company anticipates a free cash flow of $900 million to $1,100 million for 2026, reflecting continued strong cash generation capabilities[42]. Market Outlook - For 2026, net sales are expected to be in the range of $14.0 billion to $14.3 billion, implying a year-over-year change in organic sales of down 3.5% to down 1.5%[13]. - BorgWarner expects adjusted net earnings for 2026 to be within a range of $5.00 to $5.20 per diluted share[14]. - The estimated year-over-year change in production for light vehicles in 2026 is projected to be between -5% to -1% in North America, indicating potential challenges in the market[44]. Segment Performance - Light vehicle eProducts grew approximately 23% in 2025 compared to 2024, driven by demand for hybrid and electric technologies[4]. - The PowerDrive Systems segment saw a revenue increase to $623 million in Q4 2025, up from $525 million in Q4 2024, representing an 18.7% growth[21]. - Organic net sales change for 2025 was 0.5%, with notable performance in PowerDrive Systems, which saw a 20.0% increase in net sales[39]. Challenges and Impairments - The company is facing challenges related to supply disruptions, competitive pressures, and the need for innovation in rapidly changing technologies[19]. - The company incurred impairment charges of $582 million in Q4 2025, slightly down from $646 million in Q4 2024[20]. - Net loss attributable to BorgWarner Inc. for Q4 2025 was $262 million, compared to a net loss of $405 million in Q4 2024[20]. Assets and Liabilities - Total assets decreased to $13,769 million as of December 31, 2025, down from $13,993 million as of December 31, 2024[24]. - Cash and cash equivalents increased to $2,313 million in Q4 2025, compared to $2,094 million in Q4 2024[24]. - The company’s total liabilities decreased to $8,155 million in Q4 2025 from $8,287 million in Q4 2024[24]. - BorgWarner's segment adjusted operating income for Q4 2025 was $499 million, an increase from $435 million in Q4 2024[23]. Awards and Recognition - The company secured a Turbine Generator System Award for the AI-driven data center market, with estimated sales of more than $300 million during the first year of production[3][5].

Core Insights - BorgWarner has secured a contract with a major North American OEM to provide an 800-volt secondary integrated drive module (iDM) and a generator module with a dual inverter for range extended electric vehicle (REEV) trucks and SUVs, with production set to begin in 2029 [1][2] Group 1: Product Details - The 800-volt iDM is a scalable, two-in-one drive module that includes a fully integrated induction e-machine and gearbox for hybrid or electric vehicle applications [1] - The generator module features a permanent magnet electric machine and a dual inverter mounted directly to an internal combustion engine (ICE), enhancing the vehicle's range [1] - The design of the iDM utilizes a highly efficient and torque-dense induction electric machine, eliminating the need for permanent magnets, which supports a resilient supply chain [1][2] Group 2: Company Milestones and Strategy - This contract represents a significant business win for BorgWarner, showcasing its innovative design and manufacturing capabilities in the propulsion space [1] - The introduction of the next-generation Viper power module is a key milestone for the company, contributing to a compact and cost-effective design with optimized system efficiency [1][2] - BorgWarner emphasizes its commitment to sustainability and innovation, aiming to build a cleaner and safer future through its mobility solutions [1][2]

BorgWarner Secures Its First 48V Electric Cross Differential Program [Accessibility Statement] Skip Navigation- First 48V electric cross differential (eXD) program award in BorgWarner's global portfolio- BorgWarner expands its 48V electric vehicle technology portfolio in ChinaAUBURN HILLS, Mich., Feb. 11, 2026 /PRNewswire/ -- BorgWarner has secured a new electric cross differential (eXD) program with a leading Chinese original equipment manufacturer (OEM). The eXD solution is designed for a 48V system and i ...

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Core Insights - BorgWarner reported strong financial results for 2025, with adjusted net earnings per diluted share increasing by approximately 14% to $4.91 compared to 2024, driven by higher operating income and share repurchases [1][2] - The company strategically entered the data center market with a turbine generator system, expected to generate over $300 million in sales during its first year of production starting in early 2027 [1][2] - For 2026, BorgWarner anticipates a slight decline in net sales, projecting between $14.0 billion and $14.3 billion, while expecting adjusted operating margin improvement [2][5] Full Year 2025 Highlights - BorgWarner secured a record number of light vehicle awards, which are expected to enhance profitable growth in 2027 and beyond [1] - U.S. GAAP net earnings per diluted share were $1.28, with adjusted net earnings at $4.91 [1][2] - Operating cash flow increased to $1,648 million, a 19% rise compared to 2024, while free cash flow surged by approximately 66% to $1,208 million [1][2] - Light vehicle eProducts grew by approximately 23% in 2025, reflecting strong demand for hybrid and electric technologies [1][2] New Business Awards - BorgWarner received a master supply agreement for a turbine generator system aimed at the AI-driven data center market [1] - Additional awards include an electric cross differential with a leading Chinese OEM, a battery management system for global OEMs, and integrated drive modules for various vehicle architectures [1][2] Fourth Quarter Highlights - U.S. GAAP net sales for Q4 2025 were $3,572 million, a 3.9% increase from Q4 2024 [2][4] - The company reported a net loss of $(1.23) per diluted share for Q4 2025, compared to a loss of $(1.84) in Q4 2024 [2][4] - Adjusted net earnings for Q4 2025 were $1.35 per diluted share, up approximately 34% from $1.01 in Q4 2024 [2][4] 2026 Guidance - BorgWarner expects net sales in the range of $14.0 billion to $14.3 billion for 2026, reflecting a year-over-year organic sales decline of approximately 3.5% to 1.5% [2][5] - The company anticipates an adjusted operating margin between 10.7% and 10.9% for 2026, with net earnings per diluted share projected between $4.74 and $4.91 [2][5] - Full-year operating cash flow is expected to be between $1,600 million and $1,700 million, while free cash flow is projected to range from $900 million to $1,100 million [2][5]