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Jun 30, 2023
BorgWarner Q2 2023 Earnings Report
BorgWarner reported an increase in net sales and adjusted net earnings per share, driven by higher demand and customer recoveries, but partially offset by increased input costs.
Key Takeaways
BorgWarner reported a 20% increase in net sales to $4,520 million compared to Q2 2022. U.S. GAAP net earnings were $0.87 per diluted share, while pro forma adjusted net earnings per diluted share were $1.05, up from $0.74 in Q2 2022. The company updated its full-year sales, margin, and EPS guidance, reflecting the spin-off of PHINIA.
Net sales increased by 20% to $4,520 million compared to Q2 2022.
U.S. GAAP net earnings were $0.87 per diluted share.
Pro forma adjusted net earnings were $1.05 per diluted share, up from $0.74 in Q2 2022.
The company completed the strategic spin-off of PHINIA on July 3, 2023.
BorgWarner
BorgWarner
Forward Guidance
The Company has updated full year sales, margin and EPS guidance. Net sales for 2023 are expected to be in the range of $14.2 billion to $14.6 billion. Operating margin from continuing operations for the full year is expected to be in the range of 7.6% to 8.0%. Net earnings from continuing operations are expected to be within a range of $2.58 to $2.75 per diluted share. Full-year operating cash from continuing operations is expected to be in the range of $1,000 million to $1,150 million, while free cash flow from continuing operations is expected to be in the range of $400 million to $500 million, excluding one-time cash costs associated with the PHINIA spin-off.
Positive Outlook
- Net sales for 2023 are expected to be in the range of $14.2 billion to $14.6 billion.
- Implies a year-over-year increase in organic sales of 13% to 16%.
- Operating margin from continuing operations for the full year is expected to be in the range of 7.6% to 8.0%.
- Adjusted operating margin from continuing operations is expected to be in the range of 9.2% to 9.6%.
- Net earnings from continuing operations are expected to be within a range of $2.58 to $2.75 per diluted share.
Challenges Ahead
- Foreign currencies are expected to result in a year-over-year decrease in sales of approximately $35 million.
- Free cash flow from continuing operations is expected to be in the range of $400 million to $500 million, excluding one-time cash costs associated with the PHINIA spin-off.
- Supply disruptions impacting us or our customers
- Commodity availability and pricing, and an inability to achieve expected levels of recoverability in commercial negotiations with customers concerning these costs
- Fluctuations in interest rates and foreign currency exchange rates