BorgWarner Inc. BWA reported adjusted earnings of $1.24 per share for third-quarter 2022, up from 80 cents recorded in the prior-year quarter. The bottom line also beat the Zacks Consensus Estimate of $1.02 per share. Higher-than-anticipated revenues across Fuel Systems and Aftermarket segments resulted in the outperformance. The automotive equipment supplier reported net sales of $4,060 million, outpacing the Zacks Consensus Estimate of $3,977 million. The top line, however, also moved up 18.8% year over year.
Segmental Performance
Air Management: Net sales totaled $1,908 million in the reported quarter compared with $1,671 million in the year-ago period. The sales figure, however, fell short of the Zacks Consensus Estimate of $1,939 million. Adjusted EBIT of $277 million rose from $214 million recorded in the year-ago quarter and topped the consensus metric of $258 million.
e-Propulsion & Drivetrain: Sales from the segment were $1,371 million, up from $1,223 million a year ago. The sales figure, however, missed the Zacks Consensus Estimate of $1,384 million. The segment generated an adjusted EBIT of $86 million compared with $83 million in the corresponding period of 2021. The figure missed the consensus metric of $129 million.
Fuel Systems: Sales from the segment totaled $600 million, up from $515 million generated in the year-ago quarter. The metric also surpassed the consensus estimate of $524 million. The segment generated an adjusted EBIT of $83 million, up from $52 million recorded in the corresponding period of 2021.
Aftermarket: Sales from the segment totaled $327 million, up from $316 million in the year-ago quarter. The figure outpaced the Zacks Consensus Estimate of $275 million. The segment generated an adjusted EBIT of $49 million, up from $43 million.
Financial Position
In the June-September quarter, BorgWarner had $1,241 million in cash equivalents compared with $1,841 million on Dec 31, 2021. In the September quarter, long-term debt was $4,080 million, down from $4,261 million recorded on Dec 31, 2021.
Net cash provided by operating activities was $347 million in the quarter under review. Capital expenditure and FCF totaled $180 million and $167 million, respectively.
2022 Projections
For full-year 2022, the company anticipates net sales within $15.4-$15.7 billion, indicating year-over-year growth of 12-14%. Importantly, BorgWarner envisions electric vehicle revenues of around $850 million for 2022, doubling from 2021 levels.
Adjusted operating margin is expected in the band of 10-12%. Adjusted net earnings are estimated to be within $4.25-$4.45 share. Free cash flow is projected in the band of $650-$750 million.
Zacks Rank & Key Picks
BorgWarner currently has a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Cummins Inc. CMI, CarParts.com PRTS and Allison Transmission Holdings ALSN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Cummins has an expected earnings growth rate of 18.4% for the current year. The Zacks Consensus Estimate for CMI’s current-year earnings has been revised 1% upward in the past 30 days.
CarParts has an expected earnings growth rate of 45% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant over the past 30 days.
Allison has an expected earnings growth rate of 21.5% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 4.34% downward over the past 30 days.
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