BorgWarner (BWA) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $3.60–$3.603 billion, flat to down 2% year-over-year, with strong cost controls supporting margin and EPS performance.

• Adjusted operating margin reached 10.4%, with adjusted EPS of $1.19, both up year-over-year; GAAP EPS was $1.39, including non-comparable gains.

• Multiple new product and program awards were secured across combustion, hybrid, and electric segments, supporting future growth.

• ePropulsion segment restructuring began in June 2024, targeting $100 million annual cost savings by 2026, with $75 million cumulative restructuring costs expected.

• Announced $300 million in planned share repurchases for H2 2024, with $577 million repurchased since Q4 2023 and a new $767 million authorization.

Financial highlights

• Q2 adjusted operating income was $376 million (10.4% margin), up from $372 million (10.1%) a year ago.

• Gross margin improved to 19.0% from 18.5% year-over-year; net earnings attributable to the company were $303 million for Q2.

• Free cash flow for Q2 was $297 million, up from $30 million a year ago; net cash from operating activities was $344–$462 million for H1.

• The acquisition of Eldor added $6 million to sales but was a $9 million drag on operating income; $15 million loss recorded on Eldor contract settlement.

• Segment performance: Air Management Q2 sales $1.97 billion (down 1–3% organically), Drivetrain & Battery Systems up 7–8.9%, ePropulsion down 17.5–18%.

Outlook and guidance

• 2024 net sales guidance revised to $14.1–$14.4 billion, down from $14.4–$14.9 billion, due to FX headwinds and lower market production.

• Adjusted operating margin guidance raised to 9.6–9.8%; adjusted EPS expected at $3.95–$4.15 per diluted share.

• Free cash flow for 2024 expected at $475–$575 million, all to be returned to shareholders via buybacks and dividends.

• eProduct sales for 2024 projected at ~$2.5 billion, with full-year growth of 25% year-over-year.

• Outperformance of market production expected at 350–450 basis points for the full year.