Core Insights - BorgWarner achieved a full-year 2025 adjusted operating margin of 10.7%, with margin expansion across all business units and a reduction in corporate overhead [1][4] - The company returned approximately $630 million to shareholders in 2025, representing about 52% of free cash flow [1][7] - BorgWarner reported 2025 net sales of $14.3 billion, an increase of roughly $200 million year-over-year, driven by a 23% rise in light vehicle e-product sales [3][7] Financial Performance - In 2025, BorgWarner expanded its adjusted operating margin by 60 basis points despite a 20 basis point net tariff headwind, achieving 14% EPS growth year-over-year and generating over $1.2 billion of free cash flow [2][7] - The fourth quarter sales were just under $3.6 billion, up from just over $3.4 billion a year earlier, attributed to stronger foreign currencies and modest organic growth [8] - Adjusted operating income in Q4 was $427 million, with a 12.0% adjusted operating margin, up from $352 million and a 10.2% margin a year ago [9] 2026 Outlook - For 2026, management guided sales of $14.0–14.3 billion, with organic sales expected to decline by 3.5% to 1.5% due to a headwind from the battery business [5][14] - The adjusted operating margin is expected to be between 10.7% and 10.9%, with EPS projected at $5.00 to $5.20, indicating about 4% growth at the midpoint [5][15] - Free cash flow is anticipated to be between $900 million and $1.1 billion, reflecting higher capital spending for new product launches [15] Strategic Initiatives - BorgWarner signed a master supply agreement with TurboCell to supply a modular turbine generator system for data centers, with expected first-year sales exceeding $300 million [6][12] - The company expects to control about 65% of the content through vertical integration and plans to leverage existing plants globally for subcomponents [13] - Management emphasized the importance of new product awards across its foundational and e-product portfolios, including significant contracts with major OEMs [11][16] Market Trends and Challenges - The company noted challenges in its battery business, with near-term sales trends difficult to predict, but remains optimistic about future opportunities in commercial vehicle battery packs [18] - Management reiterated expectations for low double-digit growth in light vehicle e-products in 2026, supported by customer recoveries [17]