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BWA Q1 Earnings Beat Estimates on Cost Controls, Charging Exit
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Key Takeaways
BWA Q1 EPS of $1.24 beat estimates; revenues rose to $3.53B, though organic sales fell 4.2%.
BorgWarner lifted margins via cost controls, FX gains, and restructuring; operating margin hit 9.5%.
BWA secured 12 deals, eyes data center growth, and reaffirmed 2026 sales and EPS outlook.
BorgWarner Inc. (BWA - Free Report) delivered adjusted earnings of $1.24 per share in the first quarter of 2026, beating the Zacks Consensus Estimate of $1.16 by 6.83%. Revenues of $3.53 billion topped the Zacks Consensus Estimate of $3.47 billion by 1.74% and increased 0.5% year over year.
While reported sales benefited from stronger foreign currencies, organic net sales fell 4.2% from the year-ago quarter’s level. Disciplined cost controls and the exit of the charging business helped support profitability in a softer production environment.
Profits improved even though sales volumes were weak. On a U.S. GAAP basis, operating margin increased to 9.5% from 6.7% a year ago, while operating income rose from $237 million to $336 million. Gross margin also improved to 19.2% from 18.2%, aided by higher gross profit.
On an adjusted basis, operating margin reached 10.5%, up 50 basis points year over year, while adjusted operating income increased to $372 million from $352 million. Favorable currency movements, along with ongoing productivity gains and restructuring efforts, helped boost adjusted operating income compared with last year.
BorgWarner’s Segments Show Mixed Demand Patterns
Turbos & Thermal Technologies revenues declined 1.4% year over year to $1.43 billion, while segment adjusted operating income dropped to $214 million from $235 million. The decline was mainly due to weaker demand for some core thermal products, partially offset by currency tailwinds.
Drivetrain & Morse Systems continued to be a steadier contributor, with sales rising 4.5% to $1.42 billion and segment adjusted operating income improving to $260 million from $243 million.
PowerDrive Systems posted revenues of $587 million, up 4.6%. However, the segment still posted a loss, though it narrowed to $36 million from $43 million last year.
Battery Energy Systems sales dropped to $102 million from $150 million. However, the segment’s loss improved significantly, narrowing to $2 million from $22 million last year.
BWA Expands Portfolio With New Awards and Data Center Push
The company won 12 new business deals across different regions and products, including turbochargers, dual-clutch, variable cam timing systems, controllers for off-highway vehicles, electric motors and thermal systems for commercial vehicles. Many of these projects are expected to start production between 2026 and 2029, which should help support its long-term growth and profitability.
BWA is moving beyond light-vehicle content and expanding into data centers and other industrial markets. It plans to offer three main solutions — power generation, energy storage and power conversion.
The turbine generator system planned for launch in 2027 is on track and could generate more than $300 million in sales in its first year. Its battery storage systems and microgrid inverters are still being tested by customers and undergoing certification processes.
BorgWarner Returns Capital While Reaffirming 2026 Outlook
Shareholder returns remained a focus. BorgWarner returned about $185 million during the quarter, including $150 million in share repurchases and $35 million in dividends. The buybacks also reduced the share count, supporting EPS growth.
Cash generation improved from the prior-year quarter. Net cash provided by operating activities was $152 million compared with $82 million in the year-ago period. Capital expenditures amounted to $143 million versus $119 million a year ago. Free cash flow was $13 million versus an outflow of $35 million in the prior-year quarter.
For full-year 2026, BorgWarner anticipates net sales in the band of $14-$14.3 billion. Adjusted operating margin is expected in the band of 10.7-10.9%. Adjusted EPS is estimated to be in the range of $5-$5.20.
Operating cash flow is forecasted to be in the range of $1.6-$1.7 billion. Free cash flow is projected in the band of $900 million to $1.1 billion.
BWA’s Balance Sheet Reflects Continued Liquidity
BorgWarner had $2.11 billion in cash and cash equivalents as of March 31, 2026, down from $2.31 billion as of Dec. 31, 2025, reflecting net cash usage from financing activities tied to buybacks and dividends. Total assets were $13.65 billion as of March 31, 2026, compared with $13.77 billion as of Dec. 31, 2025.
Debt levels were broadly stable. Long-term debt was $3.88 billion as of March 31, 2026, slightly down from $3.89 billion as of Dec. 31, 2025. Liabilities amounted to $8.01 billion as of March 31, 2026, compared with $8.15 billion as of Dec. 31, 2025. Receivables increased to $3.09 billion from $2.96 billion, and inventories were essentially flat at $1.2 billion as of March 31, 2026.
PHINIA Inc. (PHIN - Free Report) reported first-quarter 2026 results on April 30. It posted adjusted earnings of $1.29 per share, which increased 37.2% year over year. The figure beat the Zacks Consensus Estimate of 92 cents by 40.2%. Net sales were $878 million, up 10.3% from the year-ago quarter’s level and topping the consensus mark of $840 million by 4.5%.
For 2026, PHINIA continues to expect net sales of $3.52-$3.72 billion, implying year-over-year growth of 1-7%. Net earnings are projected to be in the range of $165-$195 million, while adjusted EBITDA is expected in the $485-$525 million band, with a net earnings margin of 4.7-5.2% and an adjusted EBITDA margin of 13.7-14.3%. The company expects adjusted free cash flow of $200-$240 million and an adjusted tax rate of 30-34%.
Autoliv, Inc. (ALV - Free Report) reported first-quarter 2026 results on April 17. It posted adjusted earnings of $2.05 per share, which declined 4.7% year over year but surpassed the Zacks Consensus Estimate of $1.77 by 15.8%. Net sales were $2.75 billion, up 6.8% from the year-ago quarter’s level. The figure outpaced the Zacks Consensus Estimate of $2.63 billion by 4.52%.
Autoliv ended the quarter with cash and cash equivalents of $342 million compared with $322 million a year earlier. Long-term debt was $1.7 billion compared with $1.56 billion in the year- ago period. Shareholder returns continued through dividends. Autoliv paid a cash dividend of 87 cents per share in the quarter, with total dividend payments of $65 million.
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BWA Q1 Earnings Beat Estimates on Cost Controls, Charging Exit
Key Takeaways
BorgWarner Inc. (BWA - Free Report) delivered adjusted earnings of $1.24 per share in the first quarter of 2026, beating the Zacks Consensus Estimate of $1.16 by 6.83%. Revenues of $3.53 billion topped the Zacks Consensus Estimate of $3.47 billion by 1.74% and increased 0.5% year over year.
While reported sales benefited from stronger foreign currencies, organic net sales fell 4.2% from the year-ago quarter’s level. Disciplined cost controls and the exit of the charging business helped support profitability in a softer production environment.
BorgWarner Inc. Price, Consensus and EPS Surprise
BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote
BWA’s Margin Gains Offset Softer Organic Sales
Profits improved even though sales volumes were weak. On a U.S. GAAP basis, operating margin increased to 9.5% from 6.7% a year ago, while operating income rose from $237 million to $336 million. Gross margin also improved to 19.2% from 18.2%, aided by higher gross profit.
On an adjusted basis, operating margin reached 10.5%, up 50 basis points year over year, while adjusted operating income increased to $372 million from $352 million. Favorable currency movements, along with ongoing productivity gains and restructuring efforts, helped boost adjusted operating income compared with last year.
BorgWarner’s Segments Show Mixed Demand Patterns
Turbos & Thermal Technologies revenues declined 1.4% year over year to $1.43 billion, while segment adjusted operating income dropped to $214 million from $235 million. The decline was mainly due to weaker demand for some core thermal products, partially offset by currency tailwinds.
Drivetrain & Morse Systems continued to be a steadier contributor, with sales rising 4.5% to $1.42 billion and segment adjusted operating income improving to $260 million from $243 million.
PowerDrive Systems posted revenues of $587 million, up 4.6%. However, the segment still posted a loss, though it narrowed to $36 million from $43 million last year.
Battery Energy Systems sales dropped to $102 million from $150 million. However, the segment’s loss improved significantly, narrowing to $2 million from $22 million last year.
BWA Expands Portfolio With New Awards and Data Center Push
The company won 12 new business deals across different regions and products, including turbochargers, dual-clutch, variable cam timing systems, controllers for off-highway vehicles, electric motors and thermal systems for commercial vehicles. Many of these projects are expected to start production between 2026 and 2029, which should help support its long-term growth and profitability.
BWA is moving beyond light-vehicle content and expanding into data centers and other industrial markets. It plans to offer three main solutions — power generation, energy storage and power conversion.
The turbine generator system planned for launch in 2027 is on track and could generate more than $300 million in sales in its first year. Its battery storage systems and microgrid inverters are still being tested by customers and undergoing certification processes.
BorgWarner Returns Capital While Reaffirming 2026 Outlook
Shareholder returns remained a focus. BorgWarner returned about $185 million during the quarter, including $150 million in share repurchases and $35 million in dividends. The buybacks also reduced the share count, supporting EPS growth.
Cash generation improved from the prior-year quarter. Net cash provided by operating activities was $152 million compared with $82 million in the year-ago period. Capital expenditures amounted to $143 million versus $119 million a year ago. Free cash flow was $13 million versus an outflow of $35 million in the prior-year quarter.
For full-year 2026, BorgWarner anticipates net sales in the band of $14-$14.3 billion. Adjusted operating margin is expected in the band of 10.7-10.9%. Adjusted EPS is estimated to be in the range of $5-$5.20.
Operating cash flow is forecasted to be in the range of $1.6-$1.7 billion. Free cash flow is projected in the band of $900 million to $1.1 billion.
BWA’s Balance Sheet Reflects Continued Liquidity
BorgWarner had $2.11 billion in cash and cash equivalents as of March 31, 2026, down from $2.31 billion as of Dec. 31, 2025, reflecting net cash usage from financing activities tied to buybacks and dividends. Total assets were $13.65 billion as of March 31, 2026, compared with $13.77 billion as of Dec. 31, 2025.
Debt levels were broadly stable. Long-term debt was $3.88 billion as of March 31, 2026, slightly down from $3.89 billion as of Dec. 31, 2025. Liabilities amounted to $8.01 billion as of March 31, 2026, compared with $8.15 billion as of Dec. 31, 2025. Receivables increased to $3.09 billion from $2.96 billion, and inventories were essentially flat at $1.2 billion as of March 31, 2026.
BWA currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
PHINIA Inc. (PHIN - Free Report) reported first-quarter 2026 results on April 30. It posted adjusted earnings of $1.29 per share, which increased 37.2% year over year. The figure beat the Zacks Consensus Estimate of 92 cents by 40.2%. Net sales were $878 million, up 10.3% from the year-ago quarter’s level and topping the consensus mark of $840 million by 4.5%.
For 2026, PHINIA continues to expect net sales of $3.52-$3.72 billion, implying year-over-year growth of 1-7%. Net earnings are projected to be in the range of $165-$195 million, while adjusted EBITDA is expected in the $485-$525 million band, with a net earnings margin of 4.7-5.2% and an adjusted EBITDA margin of 13.7-14.3%. The company expects adjusted free cash flow of $200-$240 million and an adjusted tax rate of 30-34%.
Autoliv, Inc. (ALV - Free Report) reported first-quarter 2026 results on April 17. It posted adjusted earnings of $2.05 per share, which declined 4.7% year over year but surpassed the Zacks Consensus Estimate of $1.77 by 15.8%. Net sales were $2.75 billion, up 6.8% from the year-ago quarter’s level. The figure outpaced the Zacks Consensus Estimate of $2.63 billion by 4.52%.
Autoliv ended the quarter with cash and cash equivalents of $342 million compared with $322 million a year earlier. Long-term debt was $1.7 billion compared with $1.56 billion in the year- ago period. Shareholder returns continued through dividends. Autoliv paid a cash dividend of 87 cents per share in the quarter, with total dividend payments of $65 million.