BorgWarner (BWA) Q1 2026 earnings summary

Executive summary

• Q1 2026 net sales were $3.53 billion, up 1% year-over-year, with organic net sales down 4.2% due to lower Battery Energy Systems sales and market production declines.

• Adjusted operating margin improved to 10.5%, with adjusted EPS up 12% to $1.24, supported by cost controls, share repurchases, and the exit from the charging business.

• Secured 12 new business awards across foundational and e-products, including engine controllers, turbochargers, eMotors, and hybrid systems, supporting long-term growth.

• Expanded into data center and industrial markets with new battery energy storage and microgrid inverter offerings, with new product launches expected in 2027.

• Returned $185 million to shareholders in Q1 2026 via $150 million in share repurchases and $35 million in dividends.

Financial highlights

• Adjusted operating income was $372 million (10.5% margin), up from $352 million (10.0%) in Q1 2025.

• Adjusted EPS increased to $1.24 from $1.11 year-over-year; U.S. GAAP net earnings were $242 million ($1.16 per share), up from $157 million ($0.72 per share).

• Free cash flow was $13 million, a $48 million improvement from Q1 2025.

• Gross margin improved to 19.2% from 18.2% year-over-year.

• Net cash from operating activities was $152 million, with capital expenditures at $143 million focused on eProduct and power generation.

Outlook and guidance

• Full-year 2026 net sales projected at $14.0–$14.3 billion, with organic sales expected to decline 1.5%–3.5% year-over-year, mainly due to battery business headwinds.

• Adjusted operating margin guidance is 10.7%–10.9%; adjusted EPS expected at $5.00–$5.20 per share, up ~4% from 2025.

• Free cash flow for 2026 expected between $900 million and $1.1 billion.

• CapEx planned at $600 million–$700 million; adjusted tax rate ~23%.