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Sep 30, 2024
BorgWarner Q3 2024 Earnings Report
BorgWarner's Q3 2024 performance reflected a decrease in net sales, but an increase in adjusted earnings per share due to strong operational performance, cost controls, and share repurchases.
Key Takeaways
BorgWarner reported a 5% decrease in net sales to $3,449 million for Q3 2024, primarily due to declining market production volumes. However, adjusted earnings per diluted share increased to $1.09, driven by strong operational performance, cost controls, customer recoveries, a lower effective tax rate, and share repurchases. The company increased its full-year adjusted operating margin and EPS guidance while reducing its net sales guidance.
Achieved an adjusted operating margin of 10.1% and a U.S. GAAP operating margin of 7.8%.
Generated net cash provided by operating activities of $356 million and free cash flow of $201 million.
Increased the midpoint of full-year adjusted operating margin guidance by 20 basis points and adjusted earnings per share guidance by approximately $0.18 or 4% per diluted share.
Completed the repurchase of $300 million of the Company’s outstanding shares during the third quarter, bringing the year-to-date total to $400 million.
BorgWarner
BorgWarner
Forward Guidance
The Company has updated full year sales, margin, and EPS guidance. Net sales for 2024 are expected to be in the range of $14.0 billion to $14.2 billion. Adjusted operating margin is expected to be in the range of 9.8% to 10.0%. Adjusted net earnings are expected to be in the range of $4.15 to $4.30 per diluted share. Free cash flow is expected to be in the range of $475 million to $575 million.
Positive Outlook
- Net sales for 2024 are expected to be in the range of $14.0 billion to $14.2 billion.
- The Company expects its 2024 eProduct sales to be approximately $2.4 billion, up from approximately $2.0 billion in 2023.
- Adjusted operating margin is expected to be in the range of 9.8% to 10.0%.
- Adjusted net earnings are expected to be in the range of $4.15 to $4.30 per diluted share.
- Full-year operating cash flow is expected to be in the range of $1,325 million to $1,375 million, while free cash flow is expected to be in the range of $475 million to $575 million.
Challenges Ahead
- The Company reduced its full year mid-point net sales guidance by $150 million primarily due to a lower market production outlook.
- The Company expects its weighted light and commercial vehicle markets to be in the range of down 3.5% to down 3% year-over-year in 2024, a decrease from the Company’s prior guidance of down 3% to down 2%.
- The Company’s sales guidance implies a year-over-year decrease in organic sales of approximately (1.5)% to flat.
- Foreign currencies are expected to result in a year-over-year decrease in sales of approximately $20 million.
- Potential disruptions in the global economy caused by wars or other geopolitical conflicts.