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BorgWarner Inc. (BWA - Free Report) reported adjusted earnings of $1.35 per share for second-quarter 2023, up from $1.05 recorded in the prior-year quarter. The bottom line also outpaced the Zacks Consensus Estimate of $1.14 per share. The automotive equipment supplier reported net sales of $4,520 million, which surpassed the Zacks Consensus Estimate of $4,395 million. The top line also increased by 20% year over year.
Air Management: Net sales totaled $2,027 million in the reported quarter compared with $1,724 million in the year-ago period. Sales also surpassed our estimate of $1,958.5 million. Adjusted operating income of $307 million rose from $244 million recorded in the year-ago quarter and topped our estimate of $294.1 million.
Drivetrain & Battery Systems: Net sales totaled $1,118 million in the reported quarter compared with $896 million in the year-ago period and surpassed our projection of $1,013.3 million. Adjusted operating income of $140 million increased from $113 million recorded in the year-ago quarter.
e-Propulsion: Sales from the segment were $567 million, up from $432 million a year ago and also outpacing our estimate of $520.6 million. The segment incurred an adjusted operating loss of $19 million, narrower than $42 million in the corresponding period of 2022.
Fuel Systems: Sales from the segment totaled $605 million, up from $516 million generated in the year-ago quarter. The metric fell short of our estimate of $611.1 million. The segment generated an adjusted operating income of $57 million, up from $44 million recorded in the corresponding period of 2022 but lagging our estimate of $61.2 million.
Aftermarket: Sales from the segment totaled $339 million, up from $326 million in the year-ago quarter. The figure, however, lagged our estimate of $349.6 million. The segment generated an adjusted operating income of $52 million, up from $51 million, but lagged our estimate of $54 million.
Financial Position
In the April-June quarter, BorgWarner had $848 million in cash/cash equivalents/restricted cash compared with $1,338 million as of Dec 31, 2022. In the June quarter, long-term debt was $4,191 million, up from $4,166 million recorded on Dec 31, 2022.
Net cash provided in operating activities was $280 million in the quarter under review. Capital expenditures and FCF totaled $242 million and $38 million, respectively.
Updated 2023 Guidance
For full-year 2023, the company anticipates net sales within $14.2-$14.6 billion, down from prior guidance of $17.1-$17.9 billion but indicating year-over-year growth of 13-16%.
Adjusted operating margin is expected in the band of 9.2-9.6%, down from the prior range of 10-10.4%. Adjusted earnings are estimated to be within $3.50-$3.85 per share, down from the previously guided range of $4.60-$5.15 per share. Free cash flow is projected in the band of $400-$500 million, down from the previously guided range of $550-$650 million.
Zacks Rank & Key Picks
BorgWarner currently carries a Zacks Rank #3 (Hold).
Some top-ranked players in the auto space include Toyota Motor Corporation (TM - Free Report) and PACCAR Inc. (PCAR - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).
The Zacks Consensus Estimate for TM’s 2023 sales implies year-over-year growth of 6.8%. The EPS estimate for 2023 has moved north by 95 cents in the past 30 days. The 2024 EPS estimate has moved up by 54 cents in the past seven days.
The Zacks Consensus Estimate for PCAR’s 2023 sales and earnings implies year-over-year growth of 19.6% and 40.1%, respectively. The EPS estimate for 2023 has moved up by 43 cents in the past seven days. The 2024 EPS estimate has moved north by 11 cents in the past seven days.
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BorgWarner (BWA) Q2 Earnings Beat Estimates, Guidance Trimmed
BorgWarner Inc. (BWA - Free Report) reported adjusted earnings of $1.35 per share for second-quarter 2023, up from $1.05 recorded in the prior-year quarter. The bottom line also outpaced the Zacks Consensus Estimate of $1.14 per share. The automotive equipment supplier reported net sales of $4,520 million, which surpassed the Zacks Consensus Estimate of $4,395 million. The top line also increased by 20% year over year.
BorgWarner Inc. Price, Consensus and EPS Surprise
BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote
Segmental Performance
Air Management: Net sales totaled $2,027 million in the reported quarter compared with $1,724 million in the year-ago period. Sales also surpassed our estimate of $1,958.5 million. Adjusted operating income of $307 million rose from $244 million recorded in the year-ago quarter and topped our estimate of $294.1 million.
Drivetrain & Battery Systems: Net sales totaled $1,118 million in the reported quarter compared with $896 million in the year-ago period and surpassed our projection of $1,013.3 million. Adjusted operating income of $140 million increased from $113 million recorded in the year-ago quarter.
e-Propulsion: Sales from the segment were $567 million, up from $432 million a year ago and also outpacing our estimate of $520.6 million. The segment incurred an adjusted operating loss of $19 million, narrower than $42 million in the corresponding period of 2022.
Fuel Systems: Sales from the segment totaled $605 million, up from $516 million generated in the year-ago quarter. The metric fell short of our estimate of $611.1 million. The segment generated an adjusted operating income of $57 million, up from $44 million recorded in the corresponding period of 2022 but lagging our estimate of $61.2 million.
Aftermarket: Sales from the segment totaled $339 million, up from $326 million in the year-ago quarter. The figure, however, lagged our estimate of $349.6 million. The segment generated an adjusted operating income of $52 million, up from $51 million, but lagged our estimate of $54 million.
Financial Position
In the April-June quarter, BorgWarner had $848 million in cash/cash equivalents/restricted cash compared with $1,338 million as of Dec 31, 2022. In the June quarter, long-term debt was $4,191 million, up from $4,166 million recorded on Dec 31, 2022.
Net cash provided in operating activities was $280 million in the quarter under review. Capital expenditures and FCF totaled $242 million and $38 million, respectively.
Updated 2023 Guidance
For full-year 2023, the company anticipates net sales within $14.2-$14.6 billion, down from prior guidance of $17.1-$17.9 billion but indicating year-over-year growth of 13-16%.
Adjusted operating margin is expected in the band of 9.2-9.6%, down from the prior range of 10-10.4%. Adjusted earnings are estimated to be within $3.50-$3.85 per share, down from the previously guided range of $4.60-$5.15 per share. Free cash flow is projected in the band of $400-$500 million, down from the previously guided range of $550-$650 million.
Zacks Rank & Key Picks
BorgWarner currently carries a Zacks Rank #3 (Hold).
Some top-ranked players in the auto space include Toyota Motor Corporation (TM - Free Report) and PACCAR Inc. (PCAR - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TM’s 2023 sales implies year-over-year growth of 6.8%. The EPS estimate for 2023 has moved north by 95 cents in the past 30 days. The 2024 EPS estimate has moved up by 54 cents in the past seven days.
The Zacks Consensus Estimate for PCAR’s 2023 sales and earnings implies year-over-year growth of 19.6% and 40.1%, respectively. The EPS estimate for 2023 has moved up by 43 cents in the past seven days. The 2024 EPS estimate has moved north by 11 cents in the past seven days.