AUBURN HILLS, Mich., Oct 29, 2026 /PRNewswire/ -- BorgWarner Inc. (NYSE: BWA) today reported third quarter results for 2026.

Third Quarter Results and Business Highlights

• BorgWarner (the "Company") achieved a U.S. GAAP operating margin of 8.7% during the third quarter of 2026, or an increase of 180 basis points, compared with the third quarter of 2025. The Company achieved an adjusted operating margin of 10.9%, or an increase of 20 basis points, compared with the third quarter of 2025. The Company's continued focus on cost controls allowed it to deliver strong performance despite a lower industry production environment.
• The Company successfully executed a debt tender and make-whole redemption to reduce its gross debt balance by $864 million during the third quarter of 2026.  
• The Company repurchased approximately $175 million of its outstanding shares and paid a $35 million cash dividend to its shareholders during the third quarter of 2026.
• The Company continued to make progress in its product readiness across its portfolio offerings for the data center and industrial markets. Additionally, the Company has accelerated its quoting activity for its industrial solutions.

New Business Awards Across Portfolio
The Company secured multiple new business awards that are expected to support its long-term profitable growth, including the following:

Foundational Awards

• Engine control module award with a global OEM for a new internal combustion engine pickup truck platform. Production is expected to begin in 2029.
• Three conquest turbocharger awards with a global powertrain leader for light vehicle gasoline platforms in South America and Europe. Production is expected to begin in 2027.

eProduct Awards

• First aluminum-wire eMotor program award with a major Chinese OEM for hybrid vehicles, including generator and traction motors for auxiliary drive applications. Production is expected to begin in 2026.
• Three eMotor awards with leading OEMs in China for range-extended, battery-electric and hybrid vehicle applications. Production is expected to begin between 2027 and 2028.
• High-voltage inverter award with a global OEM for its next-generation battery-electric vehicle programs. This award builds on an established customer relationship.

Third Quarter Summary:

• U.S. GAAP net sales of $3,487 million, a decrease of approximately 2.9% compared with the third quarter of 2025.
  • Excluding the impact of foreign currencies, organic net sales decreased 3.1% compared with the third quarter of 2025.
• U.S. GAAP net earnings of $1.08 per diluted share, an increase of 47.9% compared with the third quarter of 2025.
  • Excluding $0.31 of net losses per diluted share related to non-comparable items (detailed in the table below), adjusted net earnings were $1.39 per diluted share, an increase of 12.1% compared with the third quarter of 2025.
• U.S. GAAP operating income of $302 million, or 8.7% of net sales.
  • Excluding $79 million of pretax expenses related to non-comparable items, adjusted operating income was $381 million, or 10.9% of net sales.
• Net cash provided by operating activities of $320 million.
  • Free cash flow of $195 million.

Financial Results:
The Company believes the following table is useful in highlighting non-comparable items that impacted its U.S. GAAP net earnings per diluted share. The non-comparable items presented below are calculated after tax using the corresponding effective tax rate discrete to each item and the weighted average number of diluted shares for the periods presented. The Company defines adjusted earnings per diluted share as earnings per diluted share adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expenses, discontinued operations and other gains and losses not reflective of the Company's ongoing operations and related tax effects.

Net sales were $3,487 million for the third quarter of 2026, a decrease of approximately 2.9% compared with the third quarter of 2025. This decrease was primarily driven by declining market production volumes and lower Battery Energy Systems segment sales. Net earnings for the third quarter of 2026 were $221 million, compared with net earnings of $158 million for the third quarter of 2025. Net earnings per diluted share for the third quarter of 2026 were $1.08, up 47.9% from $0.73 per diluted share for the third quarter of 2025. Adjusted net earnings per diluted share for the third quarter of 2026 were $1.39, up 12.1% from adjusted net earnings per diluted share of $1.24 for the third quarter of 2025. Adjusted net earnings for the third quarter of 2026 excluded net non-comparable items of $(0.31) per diluted share, while adjusted net earnings for the third quarter of 2025 excluded net non-comparable items of $(0.51) per diluted share. These and other non-comparable items are listed in the table above, which is provided by the Company for comparison with other results and the most directly comparable U.S. GAAP measures. The increase in adjusted net earnings per diluted share was primarily due to a lower full year effective tax rate and the impact of a lower share count resulting from share repurchases in 2025 and 2026.

Full Year 2026 Guidance Update: The Company increased its 2026 adjusted earnings per share guidance due to the expected impacts of the Company's share repurchases and a decline in its full year effective tax rate.

At the midpoint of its 2026 guidance, the Company expects to deliver another year of adjusted operating margin expansion and adjusted earnings per share growth despite the Company's expectation that its weighted light vehicle market will be down 2% to down 1% and a $10 million to $15 million industrial R&D investment to support long-term profitable growth. Net sales are expected to be in the range of $14.0 billion to $14.2 billion in 2026, compared with 2025 net sales of approximately $14.3 billion. The Company's net sales guidance range has been narrowed from its previous forecast of $14.0 billion to $14.3 billion due to lower industry production expectations at the high-end of the Company's previous guidance. The Company's net sales guidance implies a year-over-year change in organic net sales of down 4% to down 2.5%. The Company's net sales guidance includes an expected year-over-year sales decline of approximately $250 million in the Company's Battery Energy Systems segment, which represents approximately a 1.7% headwind to organic net sales growth in 2026. Foreign currencies are expected to result in a year-over-year increase in sales of approximately $250 million primarily due to the strengthening of the Euro and Chinese Renminbi against the U.S. dollar.

U.S. GAAP operating margin is expected to be in the range of 9.3% to 9.6% in 2026. Excluding the impact of non-comparable items and the add-back of intangible asset amortization expense, adjusted operating margin is expected to be in the range of 10.7% to 10.9%. U.S. GAAP net earnings are expected to be within the range of $4.65 to $4.84 per diluted share. Excluding the impact of non-comparable items, adjusted net earnings are expected to be in the range of $5.20 to $5.35 per diluted share, compared with the Company's previous adjusted net earnings guidance range of $5.05 to $5.30 per diluted share. This increase is due to the expected impacts of the Company's share repurchases and a decline in its full year effective tax rate. Full year operating cash flow is expected to be in the range of $1,600 million to $1,700 million, while free cash flow is expected to be in the range of $900 million to $1,100 million, consistent with the Company's previous guidance.

At 9:30 a.m. ET today, a brief conference call concerning third quarter 2026 results and full year guidance will be webcast at: https://www.borgwarner.com/investors. Additionally, an earnings call presentation will be available at https://www.borgwarner.com/investors.

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

Forward Looking Statements: This release may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that are based on management's current outlook, expectations, estimates and projections. Words such as "anticipates," "believes," "continues," "could," "designed," "effect," "estimates," "evaluates," "expects," "forecasts," "goal," "guidance," "initiative," "intends," "may," "outlook," "plans," "potential," "predicts," "project," "pursue," "seek," "should," "target," "when," "will," "would," and variations of such words and similar expressions are intended to identify such forward-looking statements. Further, all statements, other than statements of historical fact, contained or incorporated by reference in this release that we expect or anticipate will or may occur in the future regarding our financial position, including our guidance for full year 2026, our business strategy and measures to implement that strategy, including changes to operations, competitive strengths, goals, expansion and profitable growth of our business and operations, plans, references to future success, including the anticipated benefits of cost control and restructuring initiatives, our new business awards and other such matters, are forward-looking statements. Accounting estimates, such as those described under the heading "Critical Accounting Policies and Estimates" in Item 7 of our most recently filed Annual Report on Form 10-K ("Form 10-K"), are inherently forward-looking. All forward-looking statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. Forward-looking statements are not guarantees of performance, and the Company's actual results may differ materially from those expressed, projected or implied in or by the forward-looking statements.

You should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. Forward-looking statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. These risks and uncertainties, among others, include: the success of our portfolio strategy; supply disruptions impacting us or our customers, commodity availability and pricing and an inability to achieve expected levels of recoverability in commercial negotiations with customers concerning these costs; conditions in the automotive industry; competitive challenges from existing and new competitors, including original equipment manufacturer ("OEM") customers; the challenges associated with rapidly changing technologies, including artificial intelligence, and our ability to innovate in response; the difficulty in forecasting demand for electric vehicles and our electric vehicles revenue growth; potential future changes in laws and regulations, including, by way of example, taxes and tariffs, in the countries in which we operate; potential disruptions in the global economy caused by wars or other geopolitical conflicts; the ability to identify targets and consummate acquisitions on acceptable terms; failure to realize the expected benefits of acquisitions on a timely basis; the possibility that our 2023 tax-free spin-off of our former Fuel Systems and Aftermarket segments into a separate publicly traded company will not achieve its intended tax benefits; the failure to promptly and effectively integrate acquired businesses; the potential for unknown or inestimable liabilities relating to the acquired businesses; impacts of our exit of the charging business; our dependence on automotive and truck production, which is highly cyclical and subject to disruptions; our reliance on major OEM customers; impacts of any future strikes involving any of our OEM customers and any actions such OEM customers take in response; fluctuations in interest rates and foreign currency exchange rates; our dependence on information systems; the uncertainty of the global economic environment; the uncertainty surrounding global trade policies, including tariffs (and any potential refund recovery of tariffs imposed under the International Emergency Economic Powers Act) and export restrictions and their impact on the Company, its customers and its suppliers; the outcome of existing or any future legal proceedings, including litigation with respect to various claims, or governmental investigations, including related litigation; impacts from any potential future acquisition or disposition transactions; and the other risks discussed in reports that we file with the Securities and Exchange Commission, including in Item 1A. "Risk Factors" in our most recently filed Form 10-K and/or Quarterly Report on Form 10-Q. We do not undertake any obligation to update or announce publicly any updates to or revisions to any of the forward-looking statements in this release to reflect any change in our expectations or any change in events, conditions, circumstances, or assumptions underlying the statements.

           

           

             

Non-GAAP Financial Measures
This press release contains information about the Company's financial results that is not presented in accordance with U.S. GAAP. Such non-GAAP financial measures are reconciled to their closest U.S. GAAP financial measures below and in the Financial Results table above. The provision of these comparable U.S. GAAP financial measures for 2026 is not intended to indicate that the Company is explicitly or implicitly providing projections on those U.S. GAAP financial measures and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the Company at the date of this press release and the adjustments that management can reasonably predict.

Management believes that these non-GAAP financial measures are useful to management, investors and banking institutions in their analyses of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes.

Non-GAAP financial measures are not and should not be considered a substitute for any U.S. GAAP measure. Additionally, because not all companies use identical calculations, the non-GAAP financial measures as presented by the Company may not be comparable to similarly titled measures reported by other companies.

Adjusted Operating Income and Adjusted Operating Margin
The Company defines adjusted operating income as operating income adjusted to exclude the impact of restructuring expense, merger, acquisition and divestiture expense, intangible asset amortization expense, other net expenses, discontinued operations and other gains and losses not reflective of the Company's ongoing operations. Adjusted operating margin is defined as adjusted operating income divided by net sales.

Adjusted Net Earnings
The Company defines adjusted net earnings as net earnings attributable to the Company, adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expenses, discontinued operations and other gains and losses not reflective of the Company's ongoing operations and related tax effects. The impact of intangible asset amortization expense continues to be included in adjusted net earnings.

Adjusted Earnings per Diluted Share
The Company defines adjusted earnings per diluted share as earnings per diluted share adjusted to eliminate the impact of restructuring expense, merger, acquisition and divestiture expense, other net expenses, discontinued operations and other gains and losses not reflective of the Company's ongoing operations and related tax effects. The impact of intangible asset amortization expense continues to be included in adjusted earnings per share.

Free Cash Flow
The Company defines free cash flow as net cash provided by operating activities minus capital expenditures, net of customer advances related to capital expenditures. The Company believes this measure is useful to both management and investors in evaluating the Company's ability to service and repay its debt.

Organic Net Sales Change
The Company defines organic net sales changes as net sales change year-over-year excluding the estimated impact of foreign exchange ("FX") and net mergers, acquisitions and divestitures.

 

 

 

 

 

 

 

 

 

 

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