[First Quarter 2025 Results and Business Update](index=1&type=section&id=First%20Quarter%202025%20Results%20and%20Business%20Update) BorgWarner reported Q1 2025 financial results, including a slight sales decrease but improved adjusted operating margin and EPS, alongside strategic business exits and new contract awards [First Quarter Highlights](index=2&type=section&id=First%20Quarter%20Highlights) In Q1 2025, BorgWarner reported a 2% decrease in U.S. GAAP net sales to $3.515 billion, but achieved flat organic sales, outperforming its weighted markets which declined by 3.6% Q1 2025 Financial Performance (Continuing Operations) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | U.S. GAAP Net Sales | $3,515 million | $3,595 million | ~ (2%) | | Organic Sales Growth | +0.1% | N/A | N/A | | U.S. GAAP Operating Margin | 6.7% | 8.2% | (150) bps | | Adjusted Operating Margin | 10.0% | 9.4% | +60 bps | | U.S. GAAP EPS | $0.72 | $0.93 | (22.6%) | | Adjusted EPS | $1.11 | $1.03 | +7.8% | | Net Cash from Operating Activities | $82 million | $(118) million | +$200 million | | Free Cash Flow | $(35) million | $(308) million | +$273 million | - Announced exit from the Charging business during Q2 2025, which is expected to eliminate approximately **$30 million** of annualized adjusted operating losses[3](index=3&type=chunk) - Consolidation of the North American Battery Systems business is expected to generate annual cost savings of approximately **$20 million** by 2026[3](index=3&type=chunk) - The company achieved market outgrowth of approximately **3.7%**, primarily driven by a **47%** year-over-year increase in light vehicle eProduct sales[3](index=3&type=chunk) [New Business Awards](index=1&type=section&id=New%20Business%20Awards) BorgWarner secured several key new business awards to support future growth, including hybrid eMotor contracts, HVCH awards, EGR component extensions, and DCT awards in China - Awarded a high-volume hybrid eMotor contract with a major North American OEM for full-size trucks, SUVs, and a performance vehicle, with launch expected in 2028[3](index=3&type=chunk) - Secured a high-voltage coolant heater (HVCH) award in North America with a global OEM for their PHEV lineup, including trucks, SUVs, and minivans, launching in 2027[3](index=3&type=chunk) - Obtained four program extensions for EGR components (valves, coolers, modules) with a major North American OEM, with production continuing through the end of 2029[3](index=3&type=chunk) - Won two dual-clutch transmission (DCT) awards in China, including a seven-year extension with a German OEM and a new award with a prominent transmission manufacturer[4](index=4&type=chunk) [Full Year 2025 Guidance Update](index=3&type=section&id=Full%20Year%202025%20Guidance%20Update) The company updated its full-year 2025 financial guidance, providing revised projections for net sales, adjusted operating margin, and adjusted EPS [Full Year 2025 Guidance](index=3&type=section&id=Full%20Year%202025%20Guidance) The company updated its full-year 2025 guidance, projecting net sales between $13.6 billion and $14.2 billion, with adjusted operating margin expected between 9.6% and 10.2% Full Year 2025 Guidance | Metric | Low Range | High Range | | :--- | :--- | :--- | | Net Sales | $13.6 billion | $14.2 billion | | Organic Sales Change | (2%) | +2% | | Adjusted Operating Margin | 9.6% | 10.2% | | Adjusted Net EPS | $4.00 | $4.45 | | Operating Cash Flow | $1,323 million | $1,375 million | | Free Cash Flow | $650 million | $750 million | - The company anticipates its weighted light and commercial vehicle markets to decline between **2%** and **4%** in 2025[10](index=10&type=chunk) - Sales guidance implies an estimated market outgrowth of **200 to 400 basis points**, an increase from previous guidance due to anticipated tariff customer recoveries[10](index=10&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section provides detailed consolidated financial statements, including statements of operations, segment performance, balance sheets, and cash flows for the reported period [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the first quarter of 2025, BorgWarner's net sales decreased to $3,515 million from $3,595 million, with operating income and net earnings also declining compared to Q1 2024 Q1 2025 vs Q1 2024 Statement of Operations (in millions, except per share) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $3,515 | $3,595 | | Gross profit | $639 | $644 | | Operating income | $237 | $295 | | Net earnings attributable to BorgWarner Inc. | $157 | $206 | | Diluted EPS from continuing operations | $0.72 | $0.93 | [Net Sales and Adjusted Operating Income by Reportable Segment](index=7&type=section&id=Net%20Sales%20and%20Adjusted%20Operating%20Income%20by%20Reportable%20Segment) In Q1 2025, PowerDrive Systems was the only segment with organic sales growth, while Turbos & Thermal Technologies and Drivetrain & Morse Systems remained key income contributors despite sales declines Q1 2025 Net Sales by Segment (in millions) | Segment | Q1 2025 Sales | Q1 2024 Sales | | :--- | :--- | :--- | | Turbos & Thermal Technologies | $1,454 | $1,574 | | Drivetrain & Morse Systems | $1,361 | $1,419 | | PowerDrive Systems | $561 | $436 | | Battery & Charging Systems | $150 | $177 | Q1 2025 Segment Adjusted Operating Income (in millions) | Segment | Q1 2025 Adj. Op. Income | Q1 2024 Adj. Op. Income | | :--- | :--- | :--- | | Turbos & Thermal Technologies | $235 | $228 | | Drivetrain & Morse Systems | $243 | $253 | | PowerDrive Systems | $(43) | $(62) | | Battery & Charging Systems | $(22) | $(15) | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $13.83 billion and total liabilities were $7.94 billion, with a decrease in cash and an increase in stockholders' equity compared to year-end 2024 Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $1,707 | $2,094 | | Total current assets | $6,379 | $6,521 | | Total assets | $13,830 | $13,993 | | Total current liabilities | $3,230 | $3,646 | | Long-term debt | $3,803 | $3,763 | | Total liabilities | $7,940 | $8,287 | | Total BorgWarner Inc. stockholders' equity | $5,720 | $5,532 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2025, net cash from operating activities significantly improved to $82 million from a prior-year use of $118 million, while free cash flow also improved to negative $35 million Q1 Cash Flow Summary (in millions) | Cash Flow Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $82 | $(118) | | Net cash used in investing activities | $(94) | $(175) | | Net cash used in financing activities | $(397) | $(183) | | Free cash flow | $(35) | $(308) | [Non-GAAP Financial Measures and Reconciliations](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section details the non-GAAP financial measures used by BorgWarner, such as Adjusted Operating Income, Adjusted EPS, Free Cash Flow, and Organic Net Sales Change [Q1 2025 Non-GAAP Reconciliations](index=11&type=section&id=Q1%202025%20Non-GAAP%20Reconciliations) For Q1 2025, U.S. GAAP operating income of $237 million was reconciled to an adjusted operating income of $352 million after accounting for various non-comparable items Q1 2025 Reconciliation of Operating Income to Adjusted Operating Income (in millions) | Description | Amount | | :--- | :--- | | **Operating income (GAAP)** | **$237** | | Impairment charges | $39 | | Restructuring expense | $31 | | Costs to exit charging business | $26 | | Intangible asset amortization expense | $17 | | Other non-comparable items | $2 | | **Adjusted operating income (Non-GAAP)** | **$352** | Q1 2025 Organic Net Sales Change Reconciliation (in millions) | Description | Amount | | :--- | :--- | | **Q1 2024 Net Sales** | **$3,595** | | Foreign Exchange (FX) Impact | $(85) | | Organic Net Sales Change | $5 | | **Q1 2025 Net Sales** | **$3,515** | [Full-Year 2025 Guidance Reconciliations](index=12&type=section&id=Full-Year%202025%20Guidance%20Reconciliations) The full-year 2025 guidance reconciles projected GAAP operating income of $1,098M-$1,223M to an adjusted operating income of $1,310M-$1,445M, and GAAP EPS to adjusted EPS FY 2025 Guidance: Operating Income to Adjusted Operating Income (in millions) | Description | Low | High | | :--- | :--- | :--- | | **Operating income (GAAP)** | **$1,098** | **$1,223** | | Restructuring expense | $80 | $90 | | Intangible asset amortization | $65 | $65 | | Impairment charges | $39 | $39 | | Costs to exit charging business | $26 | $26 | | Other non-comparable items | $4 | $4 | | **Adjusted operating income (Non-GAAP)** | **$1,310** | **$1,445** | FY 2025 Guidance: EPS to Adjusted EPS | Description | Low | High | | :--- | :--- | :--- | | **Earnings per Diluted Share (GAAP)** | **$3.44** | **$3.85** | | Restructuring expense | $0.28 | $0.32 | | Impairment charges | $0.15 | $0.15 | | Costs to exit charging business | $0.11 | $0.11 | | Other non-comparable items | $0.02 | $0.02 | | **Adjusted Earnings per Diluted Share (Non-GAAP)** | **$4.00** | **$4.45** |

Company Overview & Strategy - BorgWarner has a vision for a clean, energy-efficient world and delivers innovative and sustainable mobility solutions[9, 10] - The company aims to outgrow end markets, build on its product portfolio, and drive enhanced financial performance[21] - BorgWarner leverages its core competencies through organic and inorganic investments[21] Financial Performance & Sustainability - In 2023, approximately 87% of BorgWarner's revenue came from EV and emissions-reducing hybrid and combustion products[24] - eProduct sales reached approximately $2 billion in 2023[25] - The company achieved a 32% reduction in scope 1 and 2 emissions since 2021 and targets a 25% reduction in Scope 3 emissions by 2030 versus a 2021 baseline[26] - Since 2020, BorgWarner has returned approximately $34 billion to shareholders, including buybacks exceeding $1 billion and shareholder dividends of approximately $696 million, and the market cap of PHINIA at spin-off was approximately $17 billion[49] Product Portfolio & Market Position - BorgWarner holds a 1 or 2 market share in foundational products and is growing share in several eProducts[19] - The estimated BorgWarner content opportunity per light vehicle increases from $548 for combustion engines to $2,569 for BEVs in 2027[28] - The company's foundational sales are approximately $12 billion in 2024[30]

Core Insights - The company reported a decrease in U.S. GAAP net sales of approximately 2% for the first quarter of 2025 compared to the same period in 2024, with net sales totaling $3,515 million [5][6][14] - Adjusted earnings per diluted share increased by approximately 8% to $1.11 in Q1 2025, up from $1.03 in Q1 2024, despite a decline in net earnings per diluted share from $0.93 to $0.72 [4][6] - The company has provided full-year 2025 guidance, expecting net sales between $13.6 billion and $14.2 billion, reflecting slight growth from 2024 sales of approximately $14.1 billion [7][8] Financial Performance - U.S. GAAP net earnings for Q1 2025 were $157 million, down from $213 million in Q1 2024, while adjusted net earnings were $1.11 per diluted share, an increase from $1.03 [6][14] - The company achieved an adjusted operating margin of 10.0% in Q1 2025, compared to a U.S. GAAP operating margin of 6.7%, reflecting a 60 basis point improvement year-over-year [5][6] - The company reported net cash provided by operating activities of $82 million for Q1 2025, a significant improvement from a net cash used of $(118) million in Q1 2024 [17] Business Developments - The company secured multiple new business awards, including a high-volume hybrid eMotor award and a high-voltage coolant heater award, which are expected to support long-term profitable growth [2][5] - The company plans to exit its Charging business, which is anticipated to eliminate approximately $30 million in annualized adjusted operating losses [5][6] - The company is consolidating its North American Battery Systems business, aiming for annual cost savings of approximately $20 million by 2026 [5] Market Outlook - The company expects its weighted light and commercial vehicle markets to decline by 4% to 2% in 2025, a revision from the previous estimate of down 3% to down 1% [7][8] - The sales guidance implies a year-over-year change in organic sales of down 2% to up 2%, with an estimated outgrowth above market production of approximately 200 to 400 basis points [7][8] - The company anticipates operating margins in the range of 8.1% to 8.6% for 2025, with adjusted operating margins expected to be between 9.6% and 10.2% [8]

AUBURN HILLS, Mich., May 6, 2025 /PRNewswire/ -- BorgWarner, a global product leader in delivering innovative and sustainable mobility solutions, has entered into a contract with a major, North American-based OEM to supply its 400V SW130 (S-wind) eMotor for use on a series of hybrid full-sized trucks and SUVs. The contract expands the global presence of BorgWarner's high-voltage, high-volume S-wind eMotor technology, with production expected to begin in the second quarter of 2028. BorgWarner has entered int ...

About BorgWarner For more than 130 years, BorgWarner has been a transformative global product leader bringing successful mobility innovation to market. With a focus on sustainability, we're helping to build a cleaner, healthier, safer future for all. Forward Looking Statements: This release 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 "anticipa ...

"BorgWarner has been collaborating with this global OEM on a variety of projects and is looking forward to furthering our relationship by providing this efficient solution for battery and cabin heating," said Dr. Volker Weng, Vice President of BorgWarner Inc. and President and General Manager, Turbos and Thermal Technologies. "Our HVCH technology compared to other heaters allows us to provide a solution that improves robustness and provides cost improvements for our customer without altering the overall veh ...

Core Viewpoint - Wall Street anticipates a year-over-year decline in BorgWarner's earnings and revenues for the quarter ended March 2025, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - BorgWarner is expected to report quarterly earnings of $0.98 per share, reflecting a year-over-year decrease of 4.9% [3]. - Revenues are projected to be $3.39 billion, down 5.6% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 3.04% lower in the last 30 days, indicating a reassessment by analysts [4]. - A positive Earnings ESP of +1.39% suggests analysts have recently become more optimistic about BorgWarner's earnings prospects [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict deviations from consensus estimates, with positive readings being more reliable [6][7]. - Stocks with a positive Earnings ESP and a Zacks Rank of 1, 2, or 3 have historically produced positive surprises nearly 70% of the time [8]. Historical Performance - BorgWarner has beaten consensus EPS estimates in the last four quarters, with a notable surprise of +9.78% in the last reported quarter [12][13]. Industry Context - In the Zacks Automotive - Original Equipment industry, Lear is expected to report earnings of $2.64 per share, down 17% year-over-year, with revenues of $5.56 billion, a decrease of 7.3% [17]. - Lear's consensus EPS estimate has been revised 5.6% lower, but a higher Most Accurate Estimate results in an Earnings ESP of 3.44%, combined with a Zacks Rank of 4, making predictions of an earnings beat uncertain [18].

Core Insights - BorgWarner will present its latest inverter technology at the 46th Vienna Motor Symposium from May 14-16, 2025, including a double-sided cooled (DSC) 800V SiC power module and a next-generation multi-level traction inverter [1][2] Group 1: Technology Advancements - The DSC power module is designed to maximize efficiency and enable smaller, high-performance inverters for battery electric vehicles (BEVs) [1][2] - The innovative design of the DSC power module improves thermal management and power conversion efficiency, allowing for more compact and sustainable solutions in vehicle electrification [2] - The power module enhances thermal performance by extracting heat from both sides of the silicon carbide power switch, leading to lower junction temperatures or higher current densities [2] Group 2: Market Context - The growing adoption of BEVs and hybrids necessitates advancements in efficiency and power density for vehicle electrification [2] - BorgWarner's technology supports high-power applications and compact designs, contributing to the future of sustainable mobility [2][3]

Investment Rating - The report assigns an "Overweight" (OW) rating to General Motors (GM) and Ford, while Tesla and Rivian are rated "Underweight" (UW) [6][7]. Core Insights - The automotive industry is experiencing varied performance metrics across different companies, with GM and Ford showing potential upside in their stock prices, while Tesla and Rivian face significant downside risks [6][7]. - The report highlights the importance of valuation metrics such as EV/EBITDA, P/E ratios, and sales growth projections for assessing investment opportunities within the automotive sector [6][22]. Global Auto OEMs Investment Comparables - General Motors (GM) has a current price of $44.57 with a market cap of $43.067 billion and a target price of $53.00, indicating a 19% upside potential [6]. - Ford (F) is priced at $9.63 with a market cap of $38.294 billion and a target price of $11.00, representing a 14% upside [6]. - Ferrari (RACE) is valued at $439.97 with a target price of $460.00, showing a 5% upside [6]. - Tesla (TSLA) is currently priced at $241.37 with a target price of $120.00, indicating a -50% downside [6]. - Rivian (RIVN) has a price of $11.60 with a target price of $11.00, reflecting a -5% downside [6]. Global Auto Parts Suppliers Valuation Metrics - The average EV/EBITDA for US auto parts suppliers is projected at 1.8x for 2024, with a corresponding EBITDA margin of 12% [22]. - Aptiv (APTV) is rated "Overweight" with a current price of $51.71 and a target price of $102, indicating a 97% upside [22]. - Borg Warner (BWA) is rated "Overweight" with a price of $26.45 and a target price of $46, representing a 74% upside [22]. - Lear Corp (LEA) is rated "Overweight" with a price of $79.42 and a target price of $140, indicating a 76% upside [22]. Performance Metrics - The report indicates that the average revenue CAGR for US auto parts suppliers is projected to be 2% from 2023 to 2025 [74]. - The EBITDA margin for US auto parts suppliers is expected to be around 12% in 2025, with some companies showing higher margins [74][83]. - The report also highlights the financial returns of various suppliers, with some companies achieving significant returns on invested capital (ROIC) [54][56].

For more than 130 years, BorgWarner has been a transformative global product leader bringing successful mobility innovation to market. With a focus on sustainability, we're helping to build a cleaner, healthier, safer future for all. Forward Looking Statements: This release 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," ...