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BorgWarner (BWA) Beats on Q3 Earnings, Dims '21 Projections

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BorgWarner Inc. (BWA - Free Report) reported adjusted earnings of 80 cents per share for third-quarter 2021, declining from 88 cents recorded in the prior-year period. The bottom line, however, beat the Zacks Consensus Estimate of 66 cents. Higher-than-anticipated revenues from Air Management and Aftermarket segments resulted in the outperformance.

This automotive equipment supplier reported net sales of $3,416 million, outpacing the Zacks Consensus Estimate of $3,342 million. Further, the top-line figure grew 34.8% year over year, thanks to the Delphi Technologies buyout and increased demand for products.

BorgWarner Inc. Price, Consensus and EPS Surprise

BorgWarner Inc. Price, Consensus and EPS Surprise

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

Segmental Performance

Air Management: Net sales totaled $1,671 million for the reported quarter compared with $1,476 million registered in the year-ago period. The sales figure also topped the Zacks Consensus Estimate of $1,621 million. Adjusted EBIT of $214 million outpaced the consensus mark of $197 million but declined from $225 million recorded in third-quarter 2020.

e-Propulsion & Drivetrain: Sales from the segment came in at $1,223 million, up from $1,075 million in third-quarter 2020. The sales figure, however, fell short of the Zacks Consensus Estimate of $1,233 million. The segment generated an adjusted EBIT of $85 million for third-quarter 2021 compared with $131 million recorded in the corresponding period of 2020. The metric also lagged the consensus mark of $110 million.

Fuel Injection: Sales and adjusted EBIT from the segment totaled $420 million and $37 million, respectively. The sales figure marginally missed the Zacks Consensus Estimate of $421 million.

Aftermarket: Sales and adjusted EBIT from the segment totaled $227 million and $29 million, respectively. The sales figure outpaced the Zacks Consensus Estimate of $191 million.

Financial Position

As of Sep 30, 2021, BorgWarner — whose peers include Magna International (MGA - Free Report) , Meritor (MTOR - Free Report) and Autoliv (ALV - Free Report) — had $1,507 million in cash compared with $1,650 million on Dec 31, 2020. For the September-end quarter, long-term debt was $4,288 million, up from $3,738 million recorded on Dec 31, 2020. Net cash provided by operating activities was $142 million for the third quarter. Investment in capital expenditure, including tooling outlays, was $152 million. Free cash flow was a negative $10 million for the third quarter of 2021.

View Altered

For full-year 2021, the Zacks Rank #5 (Strong Sell) company now anticipates net sales within $14.4-$14.7 billion, down from the previous guided range of $15.2-$15.6 billion. Adjusted operating margin and net earnings are expected in the band of 9.6-10% and $3.65-$3.95 per share, lower than the earlier guidance of 10.2-10.5% and $4.15-$4.40, respectively. Free cash flow is projected in the band of $600-$700 million versus the prior guided range of $800-$900 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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