BorgWarner(BWA) - 2025 Q2 - Quarterly Report

General Information Filing Information This section details the filing as a Quarterly Report on Form 10-Q for the period ended June 30, 2025, by BorgWarner Inc., identifying it as a large accelerated filer with specific outstanding common stock - The document is a Quarterly Report on Form 10-Q for the period ended June 30, 2025[2] - BorgWarner Inc. is identified as a large accelerated filer[3] - As of July 25, 2025, the registrant had 216,392,876 shares of voting common stock outstanding[3] Forward-Looking Statements This section provides cautionary statements regarding forward-looking information in the report, highlighting that such statements are based on management's current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are based on management's current outlook, expectations, estimates, and projections[6] - Actual results may differ materially due to risks and uncertainties, including supply disruptions, competitive challenges, rapidly changing technologies, and economic conditions[7] - The Company does not undertake any obligation to update or announce publicly any updates to or revisions to any of the forward-looking statements[7] Use of Non-GAAP Financial Measures The report includes non-GAAP financial measures, which the Company believes offer useful additional information for investors to understand underlying performance and trends, but cautions that these measures have inherent limitations and should be used in conjunction with GAAP measures - Non-GAAP financial measures are included to provide additional information useful to investors in understanding underlying performance and trends[9] - These measures have inherent limitations and should not be considered in isolation or as a substitute for GAAP measures[9] - Reconciliations to the most directly comparable GAAP financial measures are provided in the report[9] PART I. Financial Information Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements of BorgWarner Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, comprehensive income (loss), and cash flows, along with accompanying notes - The accompanying unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP for interim financial information[19] - Operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the results that may be expected for the full year[19] - The balance sheet as of December 31, 2024, was derived from the audited financial statements as of that date[19] Condensed Consolidated Balance Sheets Presents the Company's financial position as of June 30, 2025, and December 31, 2024, showing changes in assets, liabilities, and equity. Total assets increased, while short-term debt significantly decreased Condensed Consolidated Balance Sheets Summary | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | Change (YoY) | | :-------------------------------- | :-------------------------- | :---------------------------- | :----------- | | Total assets | $14,399 | $13,993 | +$406 | | Total liabilities | $8,330 | $8,287 | +$43 | | Total equity | $6,069 | $5,706 | +$363 | | Short-term debt | $6 | $398 | -$392 | | Long-term debt | $3,901 | $3,763 | +$138 | | Cash, cash equivalents and restricted cash | $2,041 | $2,094 | -$53 | | Receivables, net | $3,198 | $2,843 | +$355 | | Inventories | $1,216 | $1,251 | -$35 | | Retained earnings | $6,745 | $6,412 | +$333 | Condensed Consolidated Statements of Operations Details the Company's financial performance for the three and six months ended June 30, 2025, and 2024, showing a slight increase in net sales for the quarter but a decrease for the six-month period, alongside a decline in net earnings attributable to BorgWarner Inc. for both periods Condensed Consolidated Statements of Operations Summary | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | Change (YoY) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (YoY) | | :------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :----------- | :--------------------------------------- | :--------------------------------------- | :----------- | | Net sales | $3,638 | $3,603 | +$35 | $7,153 | $7,198 | -$45 | | Gross profit | $640 | $685 | -$45 | $1,279 | $1,329 | -$50 | | Operating income | $289 | $297 | -$8 | $526 | $592 | -$66 | | Net earnings attributable to BorgWarner Inc. | $224 | $303 | -$79 | $381 | $509 | -$128 | | Diluted EPS from continuing operations | $1.03 | $1.39 | -$0.36 | $1.75 | $2.32 | -$0.57 | Condensed Consolidated Statements of Comprehensive Income (Loss) Presents the comprehensive income (loss) for the three and six months ended June 30, 2025, and 2024, showing a significant increase in total comprehensive income for both periods, primarily driven by positive foreign currency translation adjustments in 2025 compared to losses in 2024 Condensed Consolidated Statements of Comprehensive Income (Loss) Summary | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | Change (YoY) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (YoY) | | :------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :----------- | :--------------------------------------- | :--------------------------------------- | :----------- | | Net earnings attributable to BorgWarner Inc. | $224 | $303 | -$79 | $381 | $509 | -$128 | | Foreign currency translation adjustments | $103 | $(31) | +$134 | $162 | $(97) | +$259 | | Total other comprehensive income (loss) attributable to BorgWarner Inc. | $93 | $(55) | +$148 | $152 | $(110) | +$262 | | Comprehensive income attributable to BorgWarner Inc. | $317 | $248 | +$69 | $533 | $399 | +$134 | Condensed Consolidated Statements of Cash Flows Outlines the cash flow activities for the six months ended June 30, 2025, and 2024, indicating a substantial increase in net cash provided by operating activities and a decrease in cash used in investing activities, while cash used in financing activities significantly increased due to debt repayments Condensed Consolidated Statements of Cash Flows Summary | Metric | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (YoY) | | :------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :----------- | | Net cash provided by operating activities of continuing operations | $661 | $344 | +$317 | | Net cash used in investing activities from continuing operations | $(158) | $(313) | +$155 | | Net cash used in financing activities from continuing operations | $(606) | $(242) | -$364 | | Net decrease in cash, cash equivalents and restricted cash | $(53) | $(246) | +$193 | | Cash, cash equivalents and restricted cash of continuing operations at end of period | $2,041 | $1,288 | +$753 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures for the condensed consolidated financial statements, covering accounting policies, recent pronouncements, acquisitions, dispositions, revenue recognition, restructuring, R&D, income taxes, and other financial instruments and liabilities NOTE 1 BASIS OF PRESENTATION Explains that the unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim information, and certain prior period amounts have been reclassified. It also highlights the new business unit structure effective July 1, 2024, and the spin-off of Fuel Systems and Aftermarket segments in July 2023 - The Company implemented a new business unit and management structure effective July 1, 2024, reporting results in four segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems, and Battery & Charging Systems[21] - The Company completed the spin-off of its Fuel Systems and Aftermarket segments (PHINIA, Inc.) on July 3, 2023[22] NOTE 2 NEW ACCOUNTING PRONOUNCEMENTS Discusses recently issued accounting standards, ASU No. 2023-09 (Income Taxes) and ASU No. 2024-03 (Expense Disaggregation), noting that neither is expected to have a material impact on the Company's consolidated financial statements beyond incremental disclosures - ASU No. 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' is effective for annual reporting periods beginning after December 15, 2024[24] - ASU No. 2024-03, 'Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,' is effective for annual reporting periods beginning after December 15, 2026[25] - The Company does not expect these new guidances to have a material impact on its Consolidated Financial Statements other than related incremental disclosures[24][25] NOTE 3 ACQUISITIONS AND DISPOSITIONS Details recent acquisition activities, including Hubei Surpass Sun Electric Charging Business (SSE) and Drivetek AG, and the decision to exit the charging business (including SSE) in February 2025, resulting in charges and a sale of the SSE business - Acquired 100% of Hubei Surpass Sun Electric (SSE) electric vehicle solution, smart grid, and smart energy businesses on March 1, 2023, for ¥288 million ($42 million)[28] - Acquired 100% of Drivetek AG, an engineering and product development company, on December 1, 2022, for ₣37 million ($39 million)[32] - In February 2025, the Company decided to exit its charging business within the Battery & Charging Systems segment; production ceased in Q2 2025[33] - The SSE business was sold in Q2 2025 for approximately $7 million, resulting in charges of $3 million (Q2 2025) and $22 million (H1 2025) related to the loss on sale[34] - Total charges related to the exit of the charging business were $6 million (Q2 2025) and $32 million (H1 2025), including $9 million inventory write-off and $39 million in impairment charges (intangible assets, goodwill, fixed assets) for H1 2025[35] NOTE 4 REVENUE FROM CONTRACTS WITH CUSTOMERS Explains the Company's revenue recognition policies, primarily from OEM sales, and disaggregates revenue into Foundational products and eProducts, showing eProducts' increasing contribution to total net sales - Revenue is generally recognized upon shipment or delivery, with a limited number of highly customized products recognized using the input cost-to-cost method[37] Net Sales by Product Type | Product Type | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | Change (YoY) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (YoY) | | :------------------ | :--------------------------------------- | :--------------------------------------- | :----------- | :--------------------------------------- | :--------------------------------------- | :----------- | | Foundational products | $2,980 | $3,027 | -$47 | $5,858 | $6,116 | -$258 | | eProducts | $658 | $576 | +$82 | $1,295 | $1,082 | +$213 | | Total | $3,638 | $3,603 | +$35 | $7,153 | $7,198 | -$45 | Net Sales by Region | Region | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Change (YoY) | | :------------ | :--------------------------------------------- | :--------------------------------------------- | :----------- | | North America | $1,002 | $1,048 | -$46 | | Europe | $1,360 | $1,359 | +$1 | | Asia | $1,204 | $1,134 | +$70 | | Other | $72 | $62 | +$10 | | Total | $3,638 | $3,603 | +$35 | NOTE 5 RESTRUCTURING Details the Company's restructuring activities aimed at streamlining operations and achieving cost reductions, including the 2024 Structural Cost Plan for PowerDrive Systems and the completed 2023 Structural Cost Plan for Foundational products, along with individually approved actions Restructuring Expense by Segment | Segment | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Change (YoY) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Turbos & Thermal Technologies | $10 | $8 | +$2 | | Drivetrain & Morse Systems | $1 | $1 | $0 | | PowerDrive Systems | $1 | $14 | -$13 | | Battery & Charging Systems | $5 | $1 | +$4 | | Corporate | $0 | $1 | -$1 | | Total restructuring expense | $17 | $25 | -$8 | - The 2024 Structural Cost Plan, an approximately $75 million plan for the PowerDrive Systems segment, incurred $1 million (Q2 2025) and $17 million (H1 2025) in restructuring charges, with expected annual cost savings of $100 million to $120 million by 2026[49][61] - The 2023 Structural Cost Plan, a $130 million to $150 million plan for Foundational products, is complete, with $8 million (H1 2025) and $34 million (H1 2024) in restructuring costs recorded, and expected annual gross savings of $80 million to $90 million by 2027[50] Restructuring Liability and Cash Payments | Metric | Balance at January 1, 2025 (in millions) | Balance at June 30, 2025 (in millions) | | :-------------------------- | :--------------------------------------- | :------------------------------------- | | Total restructuring liability | $44 | $44 | | Cash payments (H1 2025) | | $(50) | NOTE 6 RESEARCH AND DEVELOPMENT COSTS Details the Company's gross and net R&D expenditures, which are included in SG&A, with customer reimbursements netted against gross expenditures. Net R&D decreased for both the three and six months ended June 30, 2025 Research and Development Costs | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | Change (YoY) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | Change (YoY) | | :---------------------- | :--------------------------------------- | :--------------------------------------- | :----------- | :--------------------------------------- | :--------------------------------------- | :----------- | | Gross R&D expenditures | $207 | $220 | -$13 | $403 | $438 | -$35 | | Customer reimbursements | $(25) | $(31) | +$6 | $(39) | $(62) | +$23 | | Net R&D expenditures | $182 | $189 | -$7 | $364 | $376 | -$12 | - Net R&D expenditures decreased by $7 million (3.7%) for Q2 2025 and $12 million (3.2%) for H1 2025[62] NOTE 7 OTHER OPERATING EXPENSE, NET Itemizes the components of Other operating expense, net, highlighting significant charges in Q2 and H1 2025 related to the exit of the charging business, CEO transition compensation, and loss on asset sales, contrasting with prior period commercial contract settlements and Spin-Off adjustments Other Operating Expense, Net | Item | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Costs to exit charging business | $4 | $0 | $23 | $0 | | Chief Executive Officer ("CEO") transition compensation | $6 | $0 | $6 | $0 | | Loss on sale of assets | $5 | $0 | $5 | $0 | | Adjustments associated with Spin-Off related balances | $2 | $11 | $(1) | $11 | | Commercial contract settlement | $0 | $15 | $0 | $15 | | Other operating expense, net | $14 | $22 | $31 | $23 | NOTE 8 INCOME TAXES Discusses the Company's provision for income taxes and effective tax rates, noting significant discrete tax benefits in prior periods and the impact of the recently enacted One Big Beautiful Bill Act, which is not expected to materially impact financial statements - The effective tax rate for Q2 2025 was 18% (provision of $52 million), compared to (10)% (benefit of $31 million) for Q2 2024, which included an $89 million discrete tax benefit[69] - The effective tax rate for H1 2025 was 22% (provision of $113 million), compared to 5% (provision of $31 million) for H1 2024, which included an $89 million discrete tax benefit[70] - The One Big Beautiful Bill Act, enacted July 4, 2025, restores 100% bonus depreciation and allows immediate expensing of domestic R&E expenditures, but is not expected to have a material impact on the Company's Consolidated Financial Statements[72] NOTE 9 INVENTORIES Provides a breakdown of inventory components, showing a slight decrease in total inventories from December 31, 2024, to June 30, 2025 Inventories by Component | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | Change | | :-------------------- | :-------------------------- | :---------------------------- | :----- | | Raw material and supplies | $898 | $915 | -$17 | | Work in progress | $149 | $147 | +$2 | | Finished goods | $169 | $189 | -$20 | | Total Inventories | $1,216 | $1,251 | -$35 | NOTE 10 OTHER ASSETS Details the composition of prepayments and other current assets, investments and long-term receivables, and other non-current assets, showing changes between June 30, 2025, and December 31, 2024 Prepayments and Other Current Assets | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :-------------------------- | :---------------------------- | | Prepaid tooling | $125 | $107 | | Prepaid taxes | $90 | $98 | | Customer incentive payments | $18 | $22 | | Contract assets | $15 | $15 | | Derivative instruments | $14 | $19 | | Other | $61 | $72 | | Total prepayments and other current assets | $323 | $333 | Investments and Long-Term Receivables | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :-------------------------- | :---------------------------- | | Investment in equity affiliates | $239 | $245 | | Investment in equity securities | $71 | $70 | | Long-term receivables | $57 | $41 | | Total investments and long-term receivables | $367 | $356 | Other Non-Current Assets | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :-------------------------- | :---------------------------- | | Deferred income taxes | $492 | $359 | | Operating leases | $165 | $177 | | Derivative instruments | $16 | $89 | | Customer incentive payments | $10 | $23 | | Other | $72 | $62 | | Total other non-current assets | $755 | $710 | NOTE 11 GOODWILL AND OTHER INTANGIBLES Details the Company's goodwill and other intangible assets, including an impairment charge of $13 million related to goodwill allocated to the charging business and $22 million for other intangible assets due to the exit of the charging business in H1 2025 - A $13 million goodwill impairment was recorded in H1 2025 related to the charging business due to the Company's plan to exit this business[76] - An additional $22 million impairment of other intangible assets was recorded in H1 2025 as a result of the exit of the charging business[80] Net Goodwill Balance by Segment | Segment | Net Goodwill Balance, December 31, 2024 (in millions) | Net Goodwill Balance, June 30, 2025 (in millions) | Change | | :-------------------------- | :------------------------------------------ | :---------------------------------------- | :----- | | Turbos & Thermal Technologies | $733 | $777 | +$44 | | Drivetrain & Morse Systems | $1,120 | $1,134 | +$14 | | PowerDrive Systems | $0 | $0 | $0 | | Battery & Charging Systems | $504 | $556 | +$52 | | Total Net goodwill balance | $2,357 | $2,467 | +$110 | Other Intangible Assets | Asset Type | Net Carrying Amount, June 30, 2025 (in millions) | Net Carrying Amount, December 31, 2024 (in millions) | Change | | :-------------------------- | :--------------------------------------- | :------------------------------------------- | :----- | | Patented and unpatented technology | $148 | $180 | -$32 | | Customer relationships | $276 | $289 | -$13 | | Miscellaneous | $2 | $2 | $0 | | Unamortized trade names | $4 | $3 | +$1 | | Total other intangible assets | $430 | $474 | -$44 | NOTE 12 PRODUCT WARRANTY Describes the Company's product warranty provisions, which are estimated based on historical data and industry trends, and summarizes the activity in the product warranty accrual accounts Product Warranty Accrual Activity | (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :-------------------------- | :-------------------------- | | Beginning balance, January 1 | $215 | $196 | | Provisions for current period sales | $47 | $38 | | Adjustments of prior estimates | $3 | $6 | | Payments | $(27) | $(31) | | Other, primarily translation adjustment | $15 | $(5) | | Ending balance, June 30 | $253 | $204 | - The total product warranty liability increased from $215 million at December 31, 2024, to $253 million at June 30, 2025[83] NOTE 13 DEBT Provides details on the Company's debt structure, including the repayment of $334 million senior notes in March 2025, changes in short-term borrowings, and the status of its revolving credit facility and commercial paper program Debt Structure | Debt Type | June 30, 2025 (in millions) | December 31, 2024 (in millions) | Change | | :------------------------------------------ | :-------------------------- | :---------------------------- | :----- | | Short-term borrowings | $3 | $61 | -$58 | | 3.375% Senior notes due 03/15/25 | $0 | $334 | -$334 | | Total long-term debt (net of current portion) | $3,901 | $3,763 | +$138 | | Total Debt | $3,904 | $4,161 | -$257 | - The Company's 3.375% senior notes, totaling $334 million, matured and were repaid on March 15, 2025[84] - Interest expense, net, increased to $12 million (Q2 2025) from $8 million (Q2 2024) and to $24 million (H1 2025) from $13 million (H1 2024), primarily due to higher debt levels following the Company's issuance of $1 billion of notes in August 2024[86][173][186] - The Company has a $2 billion multi-currency revolving credit facility maturing in September 2028, with no outstanding borrowings as of June 30, 2025[86] NOTE 14 OTHER LIABILITIES Presents a detailed breakdown of other current and non-current liabilities, showing overall increases in both categories from December 31, 2024, to June 30, 2025 Other Current Liabilities | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | Change | | :-------------------------- | :-------------------------- | :---------------------------- | :----- | | Payroll and employee related | $271 | $361 | -$90 | | Customer related | $234 | $160 | +$74 | | Indirect taxes | $135 | $117 | +$18 | | Product warranties | $93 | $88 | +$5 | | Income taxes payable | $88 | $115 | -$27 | | Employee termination benefits | $25 | $31 | -$6 | | Total other current liabilities | $1,253 | $1,216 | +$37 | Other Non-Current Liabilities | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | Change | | :-------------------------- | :-------------------------- | :---------------------------- | :----- | | Deferred income taxes | $177 | $167 | +$10 | | Product warranties | $160 | $127 | +$33 | | Other income tax liabilities | $135 | $118 | +$17 | | Operating leases | $132 | $144 | -$12 | | Derivative instruments | $122 | $5 | +$117 | | Deferred income | $107 | $88 | +$19 | | Total other non-current liabilities | $929 | $741 | +$188 | NOTE 15 FAIR VALUE MEASUREMENTS Explains the Company's fair value measurements using the ASC Topic 820 hierarchy (Level 1, 2, and 3 inputs) and provides tables classifying assets and liabilities measured at fair value on a recurring basis, including earn-out liabilities - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[93][94] Assets Measured at Fair Value on a Recurring Basis | Asset Type | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | | :-------------------------- | :-------------------- | :-------------------- | :-------------------- | | Investment in equity securities | $0 | $0 | $0 | | Foreign currency contracts | $0 | $17 | $0 | | Net investment hedge contracts | $0 | $13 | $0 | Liabilities Measured at Fair Value on a Recurring Basis | Liability Type | Level 1 (in millions) | Level 2 (in millions) | Level 3 (in millions) | | :-------------------------- | :-------------------- | :-------------------- | :-------------------- | | Current earn-out liabilities | $0 | $0 | $3 | | Net investment hedge contracts | $0 | $113 | $0 | | Foreign currency contracts | $0 | $36 | $0 | - Level 3 current earn-out liabilities decreased from $4 million at January 1, 2025, to $3 million at June 30, 2025, due to settlements and reclassification[96] NOTE 16 FINANCIAL INSTRUMENTS Describes the Company's use of financial instruments, including cash flow hedges (foreign currency derivatives) and net investment hedges (cross-currency swaps and foreign currency-denominated debt), to manage commodity price, interest rate, and foreign currency risks - The Company uses foreign currency forward and option contracts as cash flow hedges to protect against exchange rate movements for forecasted cash flows[100] - Cross-currency swaps and foreign currency-denominated debt are used as net investment hedges to manage foreign currency exposure in non-U.S. subsidiaries[103][105] - During Q2 2025, the Company unwound $700 million of cross-currency swap contracts, resulting in a cash outflow of approximately $4 million[104] Deferred Gain (Loss) in AOCI from Derivative Instruments | Contract Type | Deferred gain (loss) in AOCI at June 30, 2025 (in millions) | Deferred gain (loss) in AOCI at December 31, 2024 (in millions) | | :------------------------------------------ | :---------------------------------------------------------- | :------------------------------------------------------------- | | Cash flow hedges: Foreign currency | $(11) | $(7) | | Net investment hedges: Cross-currency swaps | $(109) | $84 | | Net investment hedges: Foreign currency-denominated debt | $34 | $168 | | Total | $(86) | $245 | NOTE 17 RETIREMENT BENEFIT PLANS Outlines the Company's defined benefit pension plans and other postemployment benefit plans, detailing the components of net periodic benefit expense and a buy-in contract for its U.K. pension plan - The Company expects to contribute approximately $20 million to its defined benefit pension plans in 2025, with $12 million contributed through H1 2025[116] - Other postemployment benefit plans are funded on a pay-as-you-go basis[116] Net Periodic Benefit Cost | Metric | 3 Months Ended June 30, 2025 (in millions) | 3 Months Ended June 30, 2024 (in millions) | 6 Months Ended June 30, 2025 (in millions) | 6 Months Ended June 30, 2024 (in millions) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | US Pension benefits | $1 | $1 | $2 | $2 | | Non-US Pension benefits | $6 | $6 | $11 | $11 | | Total Net periodic benefit cost | $7 | $7 | $13 | $13 | - In December 2024, the Company entered into a second buy-in contract for its U.K. pension plan, liquidating approximately $50 million of pension plan assets for an insurance annuity[118] NOTE 18 STOCKHOLDERS' EQUITY Summarizes the changes in stockholders' equity items, including dividends declared, stock issuances, and treasury stock purchases, for the three and six months ended June 30, 2025, and 2024 Stockholders' Equity Summary | Metric | December 31, 2024 (in millions) | June 30, 2025 (in millions) | Change | | :------------------------------------------ | :---------------------------- | :-------------------------- | :----- | | Total BorgWarner Inc. stockholders' equity | $5,532 | $5,923 | +$391 | | Retained earnings | $6,412 | $6,745 | +$333 | | Common stock held in treasury, at cost | $(2,537) | $(2,597) | -$60 | - Dividends declared were $0.11 per share for both the first and second quarters of 2025[120] - Payments for purchase of treasury stock amounted to $(109) million for the six months ended June 30, 2025[120] NOTE 19 ACCUMULATED OTHER COMPREHENSIVE LOSS Provides a summary of activity within accumulated other comprehensive loss (AOCI), highlighting significant foreign currency translation adjustments and their impact on the overall balance Accumulated Other Comprehensive Loss (AOCI) Activity | Component | Beginning Balance (Dec 31, 2024, in millions) | Ending Balance (June 30, 2025, in millions) | Change (H1 2025) | | :------------------------------------------ | :-------------------------------------------- | :------------------------------------------ | :--------------- | | Foreign currency translation adjustments | $(882) | $(720) | +$162 | | Cash flow hedges | $(9) | $(12) | -$3 | | Defined benefit retirement plans | $(129) | $(136) | -$7 | | Total AOCI | $(1,020) | $(868) | +$152 | - Foreign currency translation adjustments positively impacted AOCI by $162 million for the six months ended June 30, 2025[126] NOTE 20 CONTINGENCIES Discusses various commercial and legal claims, including a lawsuit against PHINIA for $120 million in VAT refunds and environmental liabilities at hazardous waste sites, stating that none are expected to have a material adverse effect on the Company's financial position - The Company commenced a lawsuit against PHINIA on September 19, 2024, seeking to recover approximately $120 million in VAT refunds[128] - The Company has been identified as a potentially responsible party (PRP) at 16 hazardous waste disposal sites as of June 30, 2025[129] - An accrual for environmental liabilities of $5 million was recorded as of June 30, 2025, relating to four of the sites[131] - The Company does not believe that adverse outcomes in these matters are reasonably likely to have a material adverse effect on its results of operations, financial position, or cash flows[130] NOTE 21 EARNINGS PER SHARE Explains the calculation of basic and diluted earnings per share (EPS) and provides a reconciliation, showing a decrease in both basic and diluted EPS from continuing operations for the three and six months ended June 30, 2025, compared to 2024 Basic and Diluted EPS from Continuing Operations | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Basic EPS from continuing operations | $1.04 | $1.39 | -$0.35 | $1.76 | $2.33 | -$0.57 | | Diluted EPS from continuing operations | $1.03 | $1.39 | -$0.36 | $1.75 | $2.32 | -$0.57 | - Weighted average diluted shares outstanding decreased from 227.2 million for Q2 2024 to 218.2 million for Q2 2025[134] NOTE 22 REPORTABLE SEGMENTS Describes the Company's four reportable segments (Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems, and Battery & Charging Systems) and how Segment Adjusted Operating Income (Loss) is used to assess their performance, with prior period information recast for the new structure - Effective July 1, 2024, the Company reports results in four reportable segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems, and Battery & Charging Systems[136] - Segment Adjusted Operating Income (Loss) is the primary measure used by the CODM to assess segment performance, excluding restructuring, M&A, intangible asset amortization, and impairment charges[138][139] Net Sales and Segment Adjusted Operating Income (Loss) by Segment | Segment | Q2 2025 Net Sales (in millions) | Q2 2024 Net Sales (in millions) | Change (YoY) | Q2 2025 Segment Adjusted Operating Income (Loss) (in millions) | Q2 2024 Segment Adjusted Operating Income (Loss) (in millions) | Change (YoY) | | :-------------------------- | :------------------------------ | :------------------------------ | :----------- | :------------------------------------------------------------- | :------------------------------------------------------------- | :----------- | | Turbos & Thermal Technologies | $1,481 | $1,515 | -$34 | $227 | $224 | +$3 | | Drivetrain & Morse Systems | $1,429 | $1,442 | -$13 | $260 | $266 | -$6 | | PowerDrive Systems | $581 | $464 | +$117 | $(33) | $(49) | +$16 | | Battery & Charging Systems | $159 | $193 | -$34 | $(12) | $(10) | -$2 | | Total for reportable segments | $3,638 | $3,603 | +$35 | $442 | $431 | +$11 | NOTE 23 OPERATING CASH FLOWS AND OTHER SUPPLEMENTAL FINANCIAL INFORMATION Provides a detailed reconciliation of net earnings from continuing operations to net cash provided by operating activities, highlighting significant non-cash adjustments and changes in working capital - Net cash provided by operating activities from continuing operations increased to $661 million for H1 2025, compared to $344 million for H1 2024[212] - Key non-cash adjustments for H1 2025 included depreciation and tooling amortization ($301 million), intangible asset amortization ($33 million), restructuring expense ($23 million), stock-based compensation ($33 million), impairment charges ($42 million), and costs to exit charging business ($32 million)[212] - Changes in working capital for H1 2025 included a $201 million decrease in cash from receivables, a $96 million increase from inventories, and a $91 million decrease from accounts payable and accrued expenses[212] NOTE 24 DISCONTINUED OPERATIONS Details activities related to discontinued operations following the PHINIA spin-off, including transition services agreements and spin-off related expenses incurred in prior periods - The transition services agreement with PHINIA was amended in December 2024 to extend certain engineering services until September 30, 2025[147] - No activities related to these transition services occurred during the three and six months ended June 30, 2025[147] - The Company incurred a net loss from discontinued operations of $14 million (Q2 2024) and $24 million (H1 2024) related to Spin-Off costs[148] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on the Company's financial condition, results of operations, and liquidity, discussing key trends, strategic initiatives, and economic factors influencing performance for the three and six months ended June 30, 2025 INTRODUCTION Introduces BorgWarner Inc. as a global leader in clean and efficient technology solutions for combustion, hybrid, and electric vehicles, serving OEMs worldwide - BorgWarner Inc. is a global product leader in clean and efficient technology solutions for combustion, hybrid, and electric vehicles[149] - The Company manufactures and sells products worldwide, primarily to OEMs of light vehicles, commercial vehicles, and off-highway vehicles[149] BorgWarner Strategy Outlines the Company's strategy to achieve profitable growth through organic investments and technology-focused acquisitions, particularly in electric, hybrid, and combustion vehicle technologies, while navigating EV adoption volatility - The Company's current strategy focuses on profitable growth across its technology-focused product portfolio that supports electric, hybrid, and combustion vehicles[150] - This strategy entails growing its product portfolio through organic investments and technology-focused acquisitions[150] - eProducts revenue was approximately $658 million (18% of total revenue) for Q2 2025 and $1,295 million (18% of total revenue) for H1 2025[150] Lawsuit Against PHINIA Details the ongoing lawsuit against PHINIA, Inc. to recover approximately $120 million in VAT refunds, with PHINIA having asserted counterclaims - The Company commenced a lawsuit against PHINIA on September 19, 2024, seeking to recover approximately $120 million of VAT refunds[152] - PHINIA has responded to the lawsuit and asserted counterclaims, which the Delaware Superior Court denied the Company's motion to dismiss on April 10, 2025[152] - As of June 30, 2025, the Company had an asset related to these VAT refunds of approximately $120 million, included in Receivables, net[152] Portfolio Actions Describes the Company's decision to exit its charging business within the Battery & Charging Systems segment, which ceased production in Q2 2025, and to consolidate its North American battery systems business to align with market dynamics - In February 2025, the Company decided to exit its charging business within the Battery & Charging Systems reportable segment, with production ceasing in Q2 2025[153] - This action is expected to eliminate approximately $30 million of annualized adjusted operating losses by 2026[153] - The Company also consolidated its North American battery systems business, expecting annual cost savings of approximately $20 million by 2026[154] North Carolina Facility Hurricane Reports on the impact of a hurricane on the Arden, North Carolina plant in September 2024, resulting in less than $10 million in asset damage, with operations resuming in Q4 2024 and committed insurance recoveries of $9 million recorded in Q2/H1 2025 - A hurricane disrupted operations at the Arden, North Carolina plant on September 26, 2024, causing less than $10 million in asset damage[155] - The Arden plant resumed full operations during the fourth quarter of 2024[155] - The Company recorded committed insurance recoveries of approximately $9 million during the three and six months ended June 30, 2025[155] Acquisitions States that acquisitions are an integral part of the Company's growth strategy and refers to Note 3 for details on recent acquisitions - Acquisitions have been an integral component of the Company's growth and value creation strategy[156] - Refer to Note 3, 'Acquisitions and Dispositions,' for more information on recent acquisitions[156] Key Trends and Economic Factors Discusses the Company's financial performance dependence on the cyclical global automotive industry, noting a 2% decrease in weighted average market production for H1 2025 and expecting relatively flat commodity and other costs in 2025, with potential volatility from tariffs - The Company's financial performance depends on conditions in the global automotive industry, which is cyclical and sensitive to economic factors[158] - Weighted average market production, as estimated by the Company, was down approximately 2% for the six months ended June 30, 2025, compared to the prior year[158] - The Company expects commodities and other costs to be relatively flat in 2025, but anticipates greater uncertainty and volatility due to the imposition of tariffs[159] Outlook The Company expects global industry production to decrease in 2025 but anticipates net new business growth and cost recovery actions to keep sales roughly flat year-over-year, excluding foreign currency impacts, while maintaining a positive long-term outlook driven by electrified vehicles and emissions standards - The Company expects global industry production to decrease year-over-year in 2025[160] - At the mid-point of its outlook, the Company expects sales to be roughly flat year-over-year, excluding the impact of foreign currencies, due to net new business-related sales growth and cost recovery actions[160] - The Company maintains a positive long-term outlook for its global business, driven by the adoption of product offerings for electrified vehicles and increasingly stringent global emissions standards[161] RESULTS OF OPERATIONS Provides a detailed analysis of the Company's operating results for the three and six months ended June 30, 2025, compared to the prior year, covering net sales, cost of sales, gross profit, SG&A, and other income/expenses Three Months Ended June 30, 2025 vs. Three Months Ended June 30, 2024 Net sales increased by 1% to $3,638 million, driven by foreign currency fluctuations and net new business, but gross profit and operating income decreased due to higher cost of sales and other operating expenses. Diluted EPS from continuing operations decreased to $1.03 from $1.39 - Net sales for Q2 2025 increased by $35 million (1%) to $3,638 million, primarily due to $66 million from foreign currency fluctuations[163] - Gross profit decreased by $45 million to $640 million, with gross margin declining from 19.0% to 17.6%[165] - Operating income decreased by $8 million to $289 million[162] - Selling, general and administrative (SG&A) expenses decreased by $24 million, primarily due to foreign currency fluctuations and a $7 million decrease in R&D costs[170] - Other operating expense, net, decreased to $14 million from $22 million, primarily due to the absence of a $15 million commercial contract settlement from the prior year, partially offset by new charges related to the charging business exit and CEO transition compensation[171][175] - Diluted EPS from continuing operations decreased to $1.03 from $1.39[162] Six Months Ended June 30, 2025 vs. Six Months Ended June 30, 2024 Net sales decreased by $45 million to $7,153 million, primarily due to lower market production and unfavorable customer pricing, leading to a decline in gross profit, operating income, and diluted EPS from continuing operations - Net sales for H1 2025 decreased by $45 million to $7,153 million, primarily due to a 2% decline in weighted average market production[177] - Gross profit decreased by $50 million to $1,279 million, with gross margin declining from 18.5% to 17.9%[178] - Operating income decreased by $66 million to $526 million[176] - SG&A expenses decreased by $38 million, driven by foreign currency fluctuations and lower employee-related costs[183] - Impairment charges of $42 million were recorded for intangible assets, goodwill, and fixed assets related to the charging business exit and battery systems consolidation[185] - Diluted EPS from continuing operations decreased to $1.75 from $2.32[176] Non-comparable items impacting the Company's earnings per diluted share Presents a table of non-comparable items that impacted the Company's diluted EPS, including restructuring expense, impairment charges, costs to exit the charging business, and CEO transition compensation Impact of Non-Comparable Items on Diluted EPS | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Restructuring expense | $(0.06) | $(0.08) | $(0.17) | $(0.14) | | Impairment charges | $(0.01) | $0.00 | $(0.16) | $0.00 | | Costs to exit charging business | $(0.02) | $0.00 | $(0.13) | $0.00 | | Accelerated depreciation | $(0.08) | $(0.03) | $(0.08) | $(0.03) | | Chief Executive Officer ("CEO") transition compensation | $(0.03) | $0.00 | $(0.03) | $0.00 | | Total impact of non-comparable items per share - diluted | $(0.18) | $0.30 | $(0.57) | $0.10 | Results by Reportable Segment Analyzes the net sales and Segment Adjusted Operating Income (Loss) for each of the Company's four reportable segments, highlighting performance drivers such as market production, eProducts growth, and restructuring savings Three Months Ended June 30, 2025 vs. Three Months Ended June 30, 2024 Turbos & Thermal Technologies saw a slight sales decrease but increased operating income due to efficiencies. Drivetrain & Morse Systems experienced a sales and operating income decline. PowerDrive Systems showed significant sales growth and reduced operating loss driven by eProducts. Battery & Charging Systems had decreased sales and increased operating loss due to volume and the charging business exit - Turbos & Thermal Technologies net sales decreased by $34 million (2%), but Segment Adjusted Operating Income increased by $3 million to $227 million, with margin improving to 15.3%[194] - Drivetrain & Morse Systems net sales decreased by $13 million (1%), and Segment Adjusted Operating Income decreased by $6 million to $260 million, with margin at 18.2%[195] - PowerDrive Systems net sales increased by $117 million (25%) to $581 million, driven by eProducts growth, and Segment Adjusted Operating Loss decreased by $16 million to $(33) million, with margin improving to (5.7)%[196] - Battery & Charging Systems net sales decreased by $34 million (18%) to $159 million, and Segment Adjusted Operating Loss increased by $2 million to $(12) million, with margin at (7.5)%, due to volume decline and the charging business exit[197] Six Months Ended June 30, 2025 vs. Six Months Ended June 30, 2024 Turbos & Thermal Technologies experienced a sales decrease but increased operating income. Drivetrain & Morse Systems saw declines in both sales and operating income. PowerDrive Systems achieved substantial sales growth and reduced operating loss from eProducts. Battery & Charging Systems faced sales decline and increased operating loss due to volume and the charging business exit - Turbos & Thermal Technologies net sales decreased by $154 million (5%), but Segment Adjusted Operating Income increased by $10 million to $462 million, with margin improving to 15.7%[200] - Drivetrain & Morse Systems net sales decreased by $71 million (2%), and Segment Adjusted Operating Income decreased by $16 million to $503 million, with margin at 18.0%[201] - PowerDrive Systems net sales increased by $242 million (27%) to $1,142 million, driven by eProducts growth, and Segment Adjusted Operating Loss decreased by $35 million to $(76) million, with margin improving to (6.7)%[202] - Battery & Charging Systems net sales decreased by $61 million (16%) to $309 million, and Segment Adjusted Operating Loss increased by $9 million to $(34) million, with margin at (11.0)%, due to volume decline and the charging business exit[203] FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY Discusses the Company's strong liquidity position of $4,041 million, comprising cash and an undrawn revolving credit facility, and its compliance with debt covenants. It also details cash flow activities from operations, investing, and financing - The Company maintained liquidity of $4,041 million as of June 30, 2025, including $2,041 million in cash and cash equivalents and an undrawn $2,000 million multi-currency revolving credit facility[204] - The Company was in full compliance with its covenants under the revolving credit facility[205] - Cash balances of $948 million were held by non-U.S. subsidiaries, with the majority available for repatriation[206] - The Board of Directors declared a quarterly cash dividend of $0.17 per share for Q3 2025, an increase of $0.06 per share from the previous quarter[210] - The Company holds credit ratings of BBB from Standard & Poor's, Baa1 from Moody's, and BBB+ from Fitch Ratings, all with a stable outlook[211] Cash Flows Provides a summary of cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024, highlighting significant changes in each category Operating Activities Net cash provided by operating activities significantly increased to $661 million in H1 2025 from $344 million in H1 2024, driven by higher net earnings adjusted for non-cash charges and changes in working capital - Net cash provided by operating activities of continuing operations increased to $661 million for H1 2025, compared to $344 million for H1 2024, an increase of $317 million[212] - Cash paid for interest was $61 million for H1 2025, compared to $70 million for H1 2024[212] - Cash paid for income taxes, net of refunds, was $188 million for H1 2025, compared to $197 million for H1 2024[212] Investing Activities Net cash used in investing activities decreased to $158 million in H1 2025 from $313 million in H1 2024, reflecting a disciplined approach to capital allocation and lower capital expenditures - Net cash used in investing activities from continuing operations decreased to $158 million for H1 2025, compared to $313 million for H1 2024, representing a $155 million reduction in cash used[213] - Capital expenditures, including tooling outlays, were $(196) million for H1 2025, compared to $(355) million for H1 2024[213] - Capital expenditures as a percentage of sales were 2.7% for H1 2025, down from 4.9% for H1 2024[213] Financing Activities Net cash used in financing activities increased to $606 million in H1 2025 from $242 million in H1 2024, primarily due to $403 million in debt repayments - Net cash used in financing activities from continuing operations increased to $606 million for H1 2025, compared to $242 million for H1 2024, an increase of $364 million in cash used[214] - Repayments of debt, including the current portion, amounted to $(403) million for H1 2025, primarily due to the maturity of the Company's 3.375% senior notes[214] - Payments for purchase of treasury stock were $(108) million for H1 2025, compared to $(100) million for H1 2024[214] CONTINGENCIES Refers to Note 20 for details on legal proceedings and environmental liabilities, reiterating that no material adverse effect on financial position or cash flows is expected - The Company is party to various commercial and legal claims, actions, and complaints, including matters involving warranty claims, intellectual property claims, and governmental investigations[216] - A lawsuit against PHINIA for approximately $120 million in VAT refunds is ongoing[217] - The Company has been identified as a potentially responsible party (PRP) at 16 hazardous waste disposal sites[218] - The Company believes that none of these matters, individually or in the aggregate, will have a material adverse effect on its results of operations, financial position, or cash flows[219] New Accounting Pronouncements Refers to Note 2 for a detailed description of new accounting pronouncements - Refer to Note 2, 'New Accounting Pronouncements,' to the Condensed Consolidated Financial Statements for a detailed description of new applicable accounting pronouncements[221] Item 3. Quantitative and Qualitative Disclosures About Market Risk Discusses the Company's exposure to foreign currency exchange rate risk, which is mitigated through local production, invoicing practices, and derivative instruments, and notes no material changes to interest rate or commodity price risk - There have been no material changes to the information concerning the Company's exposures to interest rate risk or commodity price risk as stated in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[222] - The Company's most significant currency exposures relate to the British Pound, Chinese Renminbi, Euro, Hungarian Forint, Korean Won, Mexican Peso, Polish Zloty, and Swiss Franc[223] - Foreign currency exchange rate risk is mitigated by establishing local production facilities, invoicing customers in the same currency as the source of products, funding foreign investments through local currency loans, and using derivative instruments[223] Approximate Impact of Currency Fluctuations on OCI | Currency | Three Months Ended June 30, 2025 (% Change in U.S. Dollars) | Three Months Ended June 30, 2025 (Approximate Impact on OCI, in millions) | Six Months Ended June 30, 2025 (% Change in U.S. Dollars) | Six Months Ended June 30, 2025 (Approximate Impact on OCI, in millions) | | :------------- | :---------------------------------------------------------- | :----------------------------------------------------------------------- | :-------------------------------------------------------- | :--------------------------------------------------------------------- | | Euro | 8% | $23 | 13% | $51 | | Korean Won | 9% | $23 | 9% | $23 | | Chinese Renminbi | 1% | $16 | 2% | $23 | | British Pound | 6% | $12 | 10% | $18 | Item 4. Controls and Procedures Confirms the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, and reports no material changes in internal control over financial reporting during the period Disclosure Controls and Procedures The Company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025 - The Company maintains disclosure controls and procedures designed to ensure timely and accurate reporting of information[226] - The Company's Chief Executive Officer and Chief Financial Officer concluded that these controls and procedures are effective as of June 30, 2025[226] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting occurred during the period covered by the report - There have been no changes in internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[227] PART II. Other Information Item 1. Legal Proceedings Refers to Note 20 for a discussion of legal proceedings and environmental litigation, which are incorporated by reference - The Company is subject to a number of claims and judicial and administrative proceedings arising out of its business[229] - Refer to Note 20, 'Contingencies,' to the Condensed Consolidated Financial Statements for a discussion of environmental and other litigation[229] Item 1A. Risk Factors Updates the risk factors from the previous 10-K, specifically replacing the section on changes in U.S. administrative policy with a revised one that emphasizes the adverse effects of tariffs and trade policy changes on costs, supply chain, and demand - No material changes from the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, except for the updated risk factor on changes in administrative policy[230] - The revised risk factor highlights that changes in administrative policy, including the imposition of or increases in tariffs, could adversely impact the Company's supply chain, increase costs, and reduce demand for its products[231] - In 2024, the Company imported approximately $875 million in value to the U.S., with significant portions originating from Mexico (55%), Canada (10%), South Korea (10%), and Malaysia, Germany, and China (5% each)[232] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities Details the Company's share repurchase authorizations, including a new $1 billion authorization in July 2025, and provides a table of equity security purchases during Q2 2025 - In July 2025, the Company's Board of Directors authorized the purchase of up to $1 billion of common stock, replacing the previous authorization and expiring on December 31, 2028[233] - As of June 30, 2025, the Company had repurchased $408 million of common stock under the previous authorization[233] Issuer Purchases of Equity Securities | Period | Total number of shares purchased | Average price per share | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under plans or programs (in millions) | | :-------------------------- | :------------------------------- | :---------------------- | :----------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 3,107