BorgWarner Beats on Q2 Earnings, Boosts Dividend & Buyback

BorgWarner BWA reported adjusted earnings of $1.21 per share for the second quarter of 2025, which surpassed the Zacks Consensus Estimate of $1.06 and increased from $1.19 recorded in the prior-year quarter. Better-than-expected adjusted operating income from the Turbos & Thermal Technologies and Drivetrain & Morse Systems segments drove the outperformance. The automotive equipment supplier reported net sales of $3.64 billion, up 1% year over year. The figure topped the Zacks Consensus Estimate of $3.55 billion.

BorgWarner Inc. Price, Consensus and EPS Surprise

BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote

Segmental Performance

Turbos & Thermal Technologies: Net sales totaled $1.48 billion in the reported quarter, down from $1.5 billion in the year-ago period. The figure, however, beat the Zacks Consensus Estimate of $1.47 billion. Adjusted operating income of $227 million increased from $224 million recorded in the year-ago quarter and topped the Zacks Consensus Estimate of $218 million.

Drivetrain & Morse Systems: Net sales totaled $1.43 billion in the reported quarter, down from $1.44 billion in the year-ago period. However, net sales outpaced the Zacks Consensus Estimate of $1.41 billion. Adjusted operating income of $260 million decreased from $266 million recorded in the year-ago period but exceeded the Zacks Consensus Estimate of $257 million.

PowerDrive Systems: Sales from the segment were $581 million, which rose 25% year over year and also beat the Zacks Consensus Estimate of $464 million. The segment incurred an adjusted operating loss of $33 million, narrower than $49 million in the corresponding period of 2024 but in line with the consensus mark.

Battery & Charging Systems: Sales from the segment were $159 million, which decreased from $193 million a year ago and missed the Zacks Consensus Estimate of $217 million. The segment incurred an adjusted operating loss of $12 million, wider than $10 million in the corresponding period of 2024 but narrower than the Zacks Consensus Estimate of a loss of $17.17 million. 

Balance Sheet, Cash Flow, Dividend & Buyback

As of June 30, 2025, BorgWarner had $2 billion in cash/cash equivalents/restricted cash compared with $2.09 billion as of Dec. 31, 2024. As of the end of second-quarter 2025, long-term debt was $3.9 billion, up from $3.76 billion recorded as of Dec. 31, 2024.

Net cash provided by the operating activities from continuing operations was $579 million in the quarter. Capital expenditures totaled $77 million. FCF totaled $507 million.

BorgWarner declared a quarterly cash dividend of 17 cents per share, representing a 55% increase from the previous payout. The dividend will be paid out on Sept. 15, 2025, to stockholders of record as of Sept. 2, 2025. Additionally, the company boosted its buyback authorization to $1 billion.

BWA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

2025 Guidance Raised

For full-year 2025, the company now anticipates net sales in the band of $14-$14.4 billion, up from the previous estimate of $13.6-$14.2 billion. Adjusted operating margin is expected in the band of 10.1-10.3%, up from 9.6-10.2% guided earlier.

Adjusted earnings per share are estimated in the range of $4.45-$4.65 compared with the previous estimate of $4-$4.45. Operating cash flow is forecasted in the range of $1,368- $1,418 million compared with the prior projected range of $1,323-$1,375 million. Free cash flow is projected in the band of $700-$800 million, up from the previous forecast of $650-$750 million.

Peer Releases

Autoliv Inc. ALV reported second-quarter 2025 adjusted earnings of $2.21 per share, which beat the Zacks Consensus Estimate of $2.07 and rose 18% year over year. The company reported net sales of $2.71 billion in the quarter, which beat the Zacks Consensus Estimate by 3.36% and also rose from $2.61 billion recorded in the year-ago quarter. Autoliv expects 2025 organic sales growth of around 3% compared with 0.4% reported in 2024. The adjusted operating margin is anticipated to be in the range of 10-10.5%, up from $9.7% in 2024. Operating cash flow is expected to be $1.2 billion in 2025, up from $1.05 billion in 2024.

Gentex Corporation GNTX posted second-quarter 2025 adjusted EPS of 47 cents, which beat the Zacks Consensus Estimate of 40 cents and increased 27.03% year over year. Net sales of $657.9 million beat the Zacks Consensus Estimate of $584 million and increased 14.8% from the year-ago period. Gentex has revised its guidance for 2025, after consolidating the VOXX merger. It expects consolidated revenues in the range of $2.44-$2.61 billion, up from the previous guidance of $2.15-$2.32 billion. Additionally, VOXX segment sales are expected to be in the range of $240-$280 million.

Lear Corp. LEA reported its second-quarter 2025 adjusted earnings per share of $3.47, which beat the Zacks Consensus Estimate of $3.23. The bottom line, however, decreased from $3.60 reported in the year-ago quarter. In the reported quarter, revenues remained flat year over year at $6.03 billion and surpassed the Zacks Consensus Estimate of $5.89 billion.Lear projects its full-year net sales in the band of $22.47-$23.07 billion. Core operating earnings are envisioned in the range of $955-$1,095 million. Lear anticipates FCF in the band of $420-$520 million.

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