Financial Data and Key Metrics Changes - The company reported sales of just under $3.6 billion for Q3 2025, reflecting a 2% year-over-year increase excluding foreign exchange impacts [15][21] - Adjusted operating margin was strong at 10.7%, a 60 basis point improvement year-over-year despite a $17 million net tariff headwind [15][17] - Free cash flow for the quarter was $266 million, a 32% increase from the previous year [15][21] Business Line Data and Key Metrics Changes - Organic sales growth was just over 2%, with a 4% increase in foundational sales, while the CV battery and charging system segment saw a decline [6][15] - Light vehicle eProduct sales increased by 6%, contributing to overall organic sales growth [16] - PowerDrive Systems (PDS) sales grew by 12% year-over-year, driven by growth in China [29] Market Data and Key Metrics Changes - The company expects a full-year sales benefit of $170 million due to the strengthening of the Euro against the U.S. Dollar [19] - The full-year market production outlook has improved to flat to down 1% year-over-year, compared to previous guidance of down 0.5% to down 2.5% [19] Company Strategy and Development Direction - The company aims to drive strong financial performance by launching profitable businesses globally and managing overall cost structures [12][13] - Focus on securing new business across the portfolio to contribute to long-term growth [13] - The company is committed to a balanced capital allocation approach that rewards shareholders while making inorganic investments [13][57] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds from a cyber-related shutdown at a European customer and supply constraints affecting production [15][68] - The company expects adjusted EPS in the range of $4.60 to $4.75 per diluted share, representing an 8% increase year-over-year at the midpoint [21] - Management remains optimistic about the long-term outlook for the battery business despite current sales headwinds [46] Other Important Information - The company returned approximately $136 million to shareholders in Q3, representing over 50% of free cash flow [8][22] - The company secured multiple new business awards across its portfolio, indicating strong demand for its products [12][14] Q&A Session Summary Question: Visibility on Q4 impact from Oswego - Management indicated a $50 to $100 million impact expected in Q4 due to the North American program [26] Question: Divisional margins, particularly PowerDrive Systems - PowerDrive Systems sales were over $580 million, with expectations for mid-teens incrementals as growth continues [29] Question: Unusual items in Q3 margin - No unusual one-time items were reported; strong performance attributed to cost controls and higher sales [36] Question: Battery and charging sales outlook - Management expects the battery business to be slightly EBITDA and free cash flow positive in 2025, despite current challenges [46] Question: Nexperia chip situation - The company has direct exposure to Nexperia and is managing the situation to mitigate impacts on customers [96] Question: Class 8 trucking market outlook - The Class 8 trucking market has been soft, but the company does not expect significant noise by year-end [98] Question: Capital allocation and share repurchases - The company plans to return $135 million in Q4, maintaining a balance between share repurchases and potential organic investments [81]

Core Insights - BorgWarner Inc. reported a third quarter net sales increase of approximately 4.1% year-over-year, reaching $3,591 million, with organic sales growth of about 2.1% [4][5] - The company returned $136 million to stockholders in the third quarter, which included approximately $100 million in share repurchases and $36 million in cash dividends [4][5] - BorgWarner has increased its full-year 2025 guidance for net sales, operating margin, EPS, and free cash flow, expecting net sales to be between $14.1 billion and $14.3 billion [6][7] Financial Performance - U.S. GAAP net earnings for the third quarter were $0.73 per diluted share, down from $1.08 in the same quarter of 2024, while adjusted net earnings per diluted share increased by 14% to $1.24 [4][5] - The U.S. GAAP operating margin for the third quarter was 6.9%, with an adjusted operating margin of 10.7%, reflecting a 60 basis point increase compared to the previous year [4][5] - Net cash provided by operating activities was $368 million, with free cash flow of $266 million for the third quarter [4][5] Business Developments - The company secured multiple new business awards, including contracts for all-wheel drive systems with Chery and a variable turbine geometry turbocharger with Stellantis [4][5] - Production for several new contracts is expected to begin between 2026 and 2027, indicating a focus on long-term growth [4][5] Guidance Update - BorgWarner expects its U.S. GAAP operating margin for 2025 to be in the range of 7.8% to 7.9%, with adjusted operating margin projected between 10.3% and 10.5% [6][7] - The company anticipates net earnings per diluted share for 2025 to be between $3.52 and $3.63, with adjusted net earnings expected to range from $4.60 to $4.75 per diluted share [6][7]