BorgWarner Q1 Earnings Surpass Expectations, Guidance Revised

BorgWarner BWA reported adjusted earnings of $1.11 per share for the first quarter of 2025, which surpassed the Zacks Consensus Estimate of 98 cents and increased from $1.03 recorded in the prior-year quarter. Better-than-expected adjusted operating income from the Turbos & Thermal Technologies unit drove the outperformance.

The automotive equipment supplier reported net sales of $3.52 billion, which topped the Zacks Consensus Estimate of $3.39 billion. The top line, however, declined 2% year over year.

BorgWarner Inc. Price, Consensus and EPS Surprise

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

BWA’s Segmental Performance

Turbos & Thermal Technologies: Net sales totaled $1.45 billion in the reported quarter. Down from $1.57 billion in the year-ago period. The figure also missed the Zacks Consensus Estimate of $1.49 billion. Adjusted operating income of $235 million increased from $228 million recorded in the year-ago quarter and beat the Zacks Consensus Estimate of $222.7 million.

Drivetrain & Morse Systems: Net sales totaled $1.36 billion in the reported quarter, down from $1.42 billion in the year-ago period. The figure also missed the Zacks Consensus Estimate of $1.37 billion. Adjusted operating income of $243 million decreased from $253 million recorded in the year-ago period and missed the Zacks Consensus Estimate of $247.9 million.

PowerDrive Systems: Sales from the segment were $561 million, which rose from $436 million a year ago. The figure also beat the Zacks Consensus Estimate of $396 million. The segment incurred an adjusted operating loss of $43 million, narrower than an operating loss of $62 million in the corresponding period of 2024 but wider than the Zacks Consensus Estimate of a loss of $30.8 million.

Battery & Charging Systems: Sales from the segment were $150 million, which decreased from $177 million a year ago. The figure also missed the Zacks Consensus Estimate of $234.5 million. The segment incurred an adjusted operating loss of $22 million, wider than an operating loss of $15 million in the corresponding period of 2024 and the Zacks Consensus Estimate of a loss of $15.5 million. 

(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Financial Position of BorgWarner

As of March 31, 2025, BorgWarner had $1.70 billion in cash/cash equivalents/restricted cash compared with $2.09 billion as of Dec. 31, 2024. As of the end of first-quarter 2025, long-term debt was $3.80 billion, up from $3.76 billion recorded as of Dec. 31, 2024.

Net cash provided by the operating activities from continuing operations was $82 million in the quarter compared with net cash used in operating activities from continuing operations of $118 million in the corresponding quarter of 2024. Capital expenditures totaled $119 million, while negative free cash flow totaled $35 million.

BWA Revises 2025 Guidance

For full-year 2025, the company now anticipates net sales in the band of $13.6-$14.2 billion compared with the previous estimate of $13.4-$14 billion.

Adjusted operating margin is expected in the band of 9.6-10.2% compared with the previous guidance of 9.1-9.2%. Adjusted earnings per share are estimated in the range of $4-$4.45 compared with the previous estimate of $4.05-$4.40. The operating cash flow is forecasted in the range of $1,323- $1,375 million compared with the prior projected range of $1,325-$1,375 million. Free cash flow is projected in the band of $650-$750 million.

BorgWarner’s Zacks Rank & Key Picks

BWA carries a Zacks Rank #4 (Sell) at present.

Some better-ranked stocks in the auto space are Hesai Group HSAI and Standard Motor Products, Inc. SMP. HSAI sports a Zacks Rank #1 (Strong Buy), while SMP carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HSAI’s 2025 earnings indicates year-over-year growth of 336.36%, respectively. EPS estimates for 2026 have improved 12 cents in the past 30 days.

The Zacks Consensus Estimate for SMP’s 2025 sales and earnings implies year-over-year growth of 17.1% and 12.62%, respectively. EPS estimates for 2025 and 2026 have improved 6 cents and a penny, respectively, in the past seven days.

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This article originally published on Zacks Investment Research (zacks.com).

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