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]

Group 1 - The BorgWarner rolling jackpot has been reset to $20,000 for 2025 after Josef Newgarden earned $440,000 with his Indianapolis 500 win in 2024 [1][7] - Newgarden has the chance to become the first driver to win the Indy 500 three consecutive years, which would also earn him an additional $20,000 [1][3] - Team owner Roger Penske aims for his 21st win in the Indy 500, having previously achieved three consecutive wins with different drivers [1][2] Group 2 - The BorgWarner jackpot was established in 1995 and increases by $20,000 each year, motivating drivers to win in consecutive years [2] - The prize money has been claimed twice, with the largest sum of $440,000 earned by Newgarden for his wins in 2023 and 2024 [2] - Before the jackpot, only four drivers had won the Indianapolis 500 in consecutive years [2] Group 3 - Joseph Fadool, President and CEO of BorgWarner, expressed excitement about Newgarden's potential historic achievement [3] - If Newgarden wins again, he will have his image sculpted and cast in sterling silver for the Borg-Warner Trophy [3] - If Newgarden does not win, the jackpot funds will roll over to the 2026 Indy 500, totaling $40,000 [4] Group 4 - BorgWarner has been a global product leader for over 130 years, focusing on mobility innovation and sustainability [5]

Core Viewpoint - BorgWarner Inc. is facing significant challenges due to higher tariffs and rising selling, general and administrative (SG&A) expenses, leading to a recommendation to offload the stock from portfolios [1]. Group 1: Financial Performance and Guidance - The company has reduced its guidance for adjusted operating margin to a range of 9.6% to 10.2%, down from the previous estimate of 10.0% to 10.2%, reflecting a 20 basis point impact from higher tariffs [2]. - BorgWarner anticipates free cash flow of $650 million to $750 million in 2025, indicating a year-over-year decline of $29 million at the midpoint of the guidance [3]. - The Zacks Consensus Estimate for 2025 sales and earnings suggests a year-over-year decline of 2.57% and 2.78%, respectively, with earnings estimates for 2025 and 2026 moving down by 8 cents and 12 cents [6]. Group 2: Cost Structure and Debt - The company is experiencing high SG&A costs, which are expected to persist, alongside elevated research and development expenses related to electrification programs, limiting profit margins [3]. - BorgWarner's long-term debt increased to $3.8 billion as of March 31, 2025, up from $3.76 billion at the end of 2024, which restricts financial flexibility [4]. Group 3: Competitive Landscape - BorgWarner competes with larger manufacturers and distributors, including Robert Bosch GmbH, Denso Corporation, and others, which may have economic advantages such as lower labor costs and subsidies [5]. - Increased competition could negatively impact BorgWarner's business prospects [5].

PART I. Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the three months ended March 31, 2025, show a decrease in net sales and net earnings compared to the same period in 2024, with positive cash flow from operations and a new segment reporting structure [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets slightly decreased to $13.83 billion, while total liabilities decreased and total equity increased Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $6,379 | $6,521 | | **Total assets** | **$13,830** | **$13,993** | | **Total current liabilities** | $3,230 | $3,646 | | **Total liabilities** | **$7,940** | **$8,287** | | **Total equity** | **$5,890** | **$5,706** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2025, net sales decreased to $3.515 billion, operating income fell to $237 million, and net earnings attributable to BorgWarner were $157 million, resulting in diluted EPS of $0.72 Q1 2025 vs Q1 2024 Statement of Operations (in millions, except per share data) | Metric | 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 attributable to BorgWarner Inc. | $0.72 | $0.90 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, the company generated $82 million in cash from operations, a significant improvement, while cash used in investing and financing activities led to a $387 million net decrease in cash Q1 2025 vs Q1 2024 Cash Flow Summary (in millions) | Activity | 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) | $(183) | | **Net decrease in cash** | **$(387)** | **$(497)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, including a new four-segment reporting structure, the financial impact of exiting the charging business, revenue disaggregation, restructuring plans, and debt information - Effective July 1, 2024, the company implemented a new four-segment reporting structure, recasting prior period information for Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems, and Battery & Charging Systems[21](index=21&type=chunk)[128](index=128&type=chunk) - The decision to exit the charging business in February 2025 resulted in **$65 million** in Q1 2025 charges, including estimated loss on sale, goodwill, and intangible asset impairments[34](index=34&type=chunk)[36](index=36&type=chunk)[70](index=70&type=chunk) Revenue Disaggregation by Product Type (in millions) | Product Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Foundational products | $2,878 | $3,089 | | eProducts | $637 | $506 | | **Total** | **$3,515** | **$3,595** | - Restructuring expenses totaled **$31 million** in Q1 2025, primarily from the 2024 and 2023 Structural Cost Plans[47](index=47&type=chunk)[155](index=155&type=chunk) - The company repaid its 3.375% senior notes upon maturity on March 15, 2025[78](index=78&type=chunk) - A lawsuit was filed against PHINIA to recover approximately **$120 million** in VAT refunds from the pre-spin-off period[119](index=119&type=chunk)[144](index=144&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 2% decline in Q1 2025 net sales to $3.5 billion, impacted by foreign currency and market production, offset by eProducts growth, with strong liquidity and a flat to modestly down 2025 sales outlook [Results of Operations](index=41&type=section&id=MD%26A%20-%20Results%20of%20Operations) Net sales for Q1 2025 decreased by $80 million to $3.515 billion due to foreign currency and market production, while operating income fell to $237 million due to impairment and restructuring charges - Net sales decreased **2% year-over-year** to **$3,515 million**, primarily due to a **$85 million** negative foreign currency impact and a **4%** decline in weighted average market production[153](index=153&type=chunk) - eProducts revenue grew to **$637 million** in Q1 2025, now representing **18%** of total revenue, up from **14%** in Q1 2024[141](index=141&type=chunk) - Operating income was impacted by non-comparable items totaling **$0.39 per diluted share**, including impairment charges, restructuring expenses, and costs to exit the charging business[168](index=168&type=chunk) [Results by Reportable Segment](index=44&type=section&id=MD%26A%20-%20Results%20by%20Reportable%20Segment) Turbos & Thermal Technologies and Drivetrain & Morse Systems saw sales declines, PowerDrive Systems sales grew significantly with a narrowed loss, while Battery & Charging Systems sales declined with a widened loss Segment Performance - Q1 2025 vs Q1 2024 (in millions) | Reportable Segment | Net Sales Q1 2025 | Net Sales Q1 2024 | Adj. Op. Income Q1 2025 | Adj. Op. Income Q1 2024 | Adj. Op. Margin % Q1 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Turbos & Thermal Technologies | $1,454 | $1,574 | $235 | $228 | 16.2% | | Drivetrain & Morse Systems | $1,361 | $1,419 | $243 | $253 | 17.9% | | PowerDrive Systems | $561 | $436 | $(43) | $(62) | (7.7)% | | Battery & Charging Systems | $150 | $177 | $(22) | $(15) | (14.7)% | [Financial Condition, Capital Resources and Liquidity](index=46&type=section&id=MD%26A%20-%20Financial%20Condition,%20Capital%20Resources%20and%20Liquidity) The company maintained strong liquidity of $3.7 billion, with $82 million in cash from operations, and used $397 million in financing activities primarily for debt repayment - Total liquidity as of March 31, 2025, was **$3,707 million**, consisting of **$1,707 million** in cash and a **$2,000 million** undrawn credit facility[177](index=177&type=chunk) - Net cash provided by operating activities was **$82 million**, a significant improvement from **$118 million** cash used in Q1 2024, driven by adjusted net earnings and working capital changes[185](index=185&type=chunk) - Financing activities included a **$346 million** debt repayment for matured senior notes and **$24 million** in dividend payments[187](index=187&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is foreign currency exchange rate fluctuations, particularly for the Euro, Chinese Renminbi, and Brazilian Real, which is mitigated through various strategies and derivative instruments - The company's most significant market risk is foreign currency exchange rate risk, primarily exposed to the **Euro**, **Chinese Renminbi**, and **Brazilian Real**[196](index=196&type=chunk)[198](index=198&type=chunk) - As of March 31, 2025, a deferred gain of **$153 million** (before tax) for designated hedges was recorded in accumulated other comprehensive income[196](index=196&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded the company's disclosure controls and procedures are **effective** as of the reporting period end[200](index=200&type=chunk) - No material changes to internal control over financial reporting occurred during Q1 2025[201](index=201&type=chunk) PART II. Other Information [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal claims in the normal course of business, which management does not expect to have a material adverse effect on its financial position - The company is party to various legal proceedings but does not expect a **material adverse effect** on its financial condition[204](index=204&type=chunk) [Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2024 Form 10-K, except for an updated risk concerning administrative policy changes, particularly tariffs, which could impact costs, supply chain, and demand - The risk factor for tariffs and trade policy has been updated, highlighting that changes in administrative policies could adversely affect the company's supply chain, costs, and product demand[206](index=206&type=chunk) - In 2024, the company imported approximately **$875 million** in value to the U.S., with **55%** from Mexico and about **10%** each from Canada and South Korea[207](index=207&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company did not repurchase shares under its common stock repurchase program in Q1 2025, with $467 million remaining available for future repurchases - No shares were repurchased under the common stock repurchase program in Q1 2025[210](index=210&type=chunk) - As of March 31, 2025, **$467 million** remained available for future repurchases under the plan authorized through December 31, 2027[208](index=208&type=chunk)[210](index=210&type=chunk) [Other Information](index=52&type=section&id=Item%205.%20Other%20Information) No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025 - No director or Section 16 officer adopted or terminated a Rule 10b5-1 trading arrangement during Q1 2025[211](index=211&type=chunk) [Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including stock incentive plans, officer certifications, and Inline XBRL data files - The report includes filed exhibits such as management compensation plans, CEO/CFO certifications, and XBRL data files[212](index=212&type=chunk)

Financial Data and Key Metrics Changes - The company reported organic sales of just over $3.5 billion, which was relatively flat despite a decline in market production [7][21] - Adjusted operating margin performance was strong at 10%, reflecting a 60 basis point increase despite a 20 basis point headwind from tariffs [8][22] - Free cash flow improved significantly, increasing by over $270 million or 89% year over year [22] Business Line Data and Key Metrics Changes - Light vehicle e product sales increased by 47%, significantly outpacing the 25% increase in global hybrid and BEV production [8][19] - The company secured multiple new product awards across its portfolio, indicating strong future growth potential [19][11] Market Data and Key Metrics Changes - Market production in the quarter was down approximately 3.6%, while the company achieved sales outgrowth of approximately 3.7% [21][22] - The company noted modest positive growth in China, with light vehicle e product growth exceeding 60% year over year across all major regions [48][49] Company Strategy and Development Direction - The company made the strategic decision to exit its charging business, which was not expected to create shareholder value [9][14] - Capacity consolidation actions were initiated within the North American battery systems business to adjust the cost structure to current market dynamics [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through a challenging and uncertain environment, emphasizing the strength of the product portfolio and operational performance [19][30] - The company expects full-year sales in the range of $13.6 billion to $14.2 billion, reflecting stronger foreign currencies and anticipated tariff cost recoveries [26][30] Other Important Information - The company anticipates a $30 million headwind to sales from the exit of the charging business but expects a $15 million increase to operating income [15] - The company is actively reviewing its M&A pipeline, looking for opportunities that align with its core competencies and financial criteria [117][120] Q&A Session Summary Question: Insights on foundational product extensions and e product awards - Management highlighted the strength and stickiness of the portfolio, expecting continued strong margins and clarity from OEMs regarding hybrid product plans [36][38] Question: Growth outlook in China - Management noted strong demand for competitive technology in China, with significant growth in light vehicle e products and positive feedback from recent auto shows [49][50] Question: Tariff impacts and recovery negotiations - Management clarified that tariff impacts are manageable, with ongoing negotiations for recovery from customers [66][100] Question: Cash deployment strategy - The company plans to use its strong cash position for shareholder value creation through dividends, buybacks, or inorganic investments [73][120] Question: M&A strategy in the current environment - Management remains active in reviewing M&A opportunities, focusing on targets that provide industrial logic and near-term accretion [117][120]

Financial Data and Key Metrics Changes - The company reported organic sales of just over $3.5 billion, which was relatively flat despite a decline in market production, with a sales outgrowth of 3.7% driven by a 47% increase in light vehicle e-product sales [6][21][22] - Adjusted operating margin performance was strong at 10%, reflecting a 60 basis point expansion despite a 20 basis point headwind from tariffs [7][24] - Free cash flow improved significantly, increasing by over $270 million or 89% year over year [22] Business Line Data and Key Metrics Changes - Light vehicle e-product sales grew by 47%, significantly outpacing the 25% increase in global hybrid and BEV production [6][7] - The company made a strategic decision to exit the charging business, which was not expected to create shareholder value, and began capacity consolidation actions within the North American battery systems business [8][14] Market Data and Key Metrics Changes - Market production in the quarter was down approximately 3.6%, but the company outgrew the market by 3.7% [21][22] - The company expects a full-year market assumption reduction to down 2% to 4% due to estimated impacts of tariffs on customer demand, particularly in North America [27][30] Company Strategy and Development Direction - The company is focused on maintaining a product portfolio that can achieve a 15% return on invested capital (ROIC) and has made decisions to exit non-profitable segments [8][14] - The company continues to secure new product awards across its portfolio, indicating a strong focus on product leadership in combustion, hybrid, and BEV architectures [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through a challenging and uncertain environment, emphasizing the strength of the product portfolio and operational performance [19][20] - The company anticipates continued outgrowth over market production, with a full-year sales outgrowth expected to be approximately 200 to 400 basis points [30][32] Other Important Information - The company expects to eliminate approximately $30 million of annualized operating losses from exiting the charging business, while this exit is projected to be a $30 million headwind to sales but a $15 million increase to operating income [15] - The company is undertaking capacity consolidation actions in its Battery Systems business to adjust to current market dynamics, which are expected to result in annual cost savings of approximately $20 million by 2026 [16][17] Q&A Session Summary Question: Insights on business extensions and reinvestment needs - Management highlighted the strength and stickiness of the portfolio, expecting continued strong margins and similar profiles for extended foundational products [38] Question: Concerns regarding rare earth elements in e-products - Management acknowledged the use of rare earth elements in products and mentioned ongoing efforts to manage supply constraints [40] Question: Growth outlook in China - Management expressed optimism about growth in China, citing strong demand for competitive technology and successful product launches [49][50] Question: Clarification on North American light vehicle production outlook - Management indicated a conservative outlook for North American production, adjusting expectations to down 7% to 12% [52] Question: Breakdown of tariff impacts - Management provided details on tariff impacts, indicating that about 50% is related to IEPA and auto parts tariffs, while the remaining 50% is from China retaliatory tariffs [98] Question: Future M&A opportunities - Management remains active in reviewing M&A opportunities, emphasizing a disciplined approach to ensure targets meet specific criteria [118][120]

Core Insights - BorgWarner (BWA) reported adjusted earnings of $1.11 per share for Q1 2025, exceeding the Zacks Consensus Estimate of 98 cents and increasing from $1.03 in the prior-year quarter, driven by better-than-expected performance in the Turbos & Thermal Technologies unit [1] - The company achieved net sales of $3.52 billion, surpassing the Zacks Consensus Estimate of $3.39 billion, although this represented a 2% decline year over year [1] Segment Performance - **Turbos & Thermal Technologies**: Net sales were $1.45 billion, down from $1.57 billion year-over-year and below the Zacks Consensus Estimate of $1.49 billion. Adjusted operating income increased to $235 million from $228 million, beating the estimate of $222.7 million [2] - **Drivetrain & Morse Systems**: Net sales totaled $1.36 billion, down from $1.42 billion year-over-year and missing the Zacks Consensus Estimate of $1.37 billion. Adjusted operating income decreased to $243 million from $253 million, falling short of the estimate of $247.9 million [3] - **PowerDrive Systems**: Sales increased to $561 million from $436 million year-over-year, exceeding the Zacks Consensus Estimate of $396 million. The segment reported an adjusted operating loss of $43 million, which was narrower than the loss of $62 million in the same period of 2024 but wider than the estimate of a loss of $30.8 million [4] - **Battery & Charging Systems**: Sales decreased to $150 million from $177 million year-over-year, missing the Zacks Consensus Estimate of $234.5 million. The segment incurred an adjusted operating loss of $22 million, wider than the loss of $15 million in the prior year and the estimate of a loss of $15.5 million [5] Financial Position - As of March 31, 2025, BorgWarner had $1.70 billion in cash and equivalents, down from $2.09 billion as of December 31, 2024. Long-term debt increased to $3.80 billion from $3.76 billion [6] - Net cash provided by operating activities was $82 million, compared to a net cash used of $118 million in the same quarter of 2024. Capital expenditures were $119 million, resulting in negative free cash flow of $35 million [7] 2025 Guidance - BorgWarner revised its full-year 2025 guidance, now expecting net sales in the range of $13.6-$14.2 billion, up from the previous estimate of $13.4-$14 billion [8] - Adjusted operating margin is projected to be between 9.6-10.2%, an increase from the prior guidance of 9.1-9.2%. Adjusted earnings per share are now estimated to be in the range of $4-$4.45, compared to the previous estimate of $4.05-$4.40 [9]

BorgWarner (BWA) came out with quarterly earnings of $1.11 per share, beating the Zacks Consensus Estimate of $0.98 per share. This compares to earnings of $1.03 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 13.27%. A quarter ago, it was expected that this auto parts supplier would post earnings of $0.92 per share when it actually produced earnings of $1.01, delivering a surprise of 9.78%.Over the last four quarters, the com ...

[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** |