BorgWarner’s (BWA) Q4 Earnings Surpass Estimates, Rise Y/Y

BorgWarner Inc. BWA reported adjusted earnings of $1.26 per share for fourth-quarter 2022, up from $1.06 recorded in the prior-year quarter. The bottom line also beat the Zacks Consensus Estimate of $1.04 per share. Higher-than-anticipated revenues across e-Propulsion & Drivetrain, Fuel-System and Aftermarket segments resulted in the outperformance. The automotive equipment supplier reported net sales of $4,108 million, outpacing the Zacks Consensus Estimate of $3,892 million. The top line also moved up 12.4% year over year.

BorgWarner Inc. Price, Consensus and EPS Surprise

BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote

Segmental Performance

Air Management: Net sales totaled $1,796 million in the reported quarter compared with $1,630 million in the year-ago period. The sales figure, however, fell short of the Zacks Consensus Estimate of $1,862 million. Adjusted EBIT of $279 million rose from $263 million recorded in the year-ago quarter and topped the consensus metric of $248 million.

e-Propulsion & Drivetrain: Sales from the segment were $1,531 million, up from $1,297 million a year ago. The sales figure also beat the Zacks Consensus Estimate of $1,367 million. The segment generated an adjusted EBIT of $143 million compared with $119 million in the corresponding period of 2021. The figure also surpassed the consensus metric of $107 million.

Fuel Systems: Sales from the segment totaled $607 million, up from $549 million generated in the year-ago quarter. The metric also surpassed the consensus estimate of $555 million. The segment generated an adjusted EBIT of $56 million, down from $76 million recorded in the corresponding period of 2021.

Aftermarket: Sales from the segment totaled $325 million, up from $292 million in the year-ago quarter. The figure outpaced the Zacks Consensus Estimate of $236 million. The segment generated an adjusted EBIT of $57 million, up from $41 million.

Financial Position

In the October-December quarter, BorgWarner had $1,338 million in cash equivalents compared with $1,844 million on Dec 31, 2021. In the December quarter, long-term debt was $4,166 million, down from $4,261 million recorded on Dec 31, 2021.

Net cash provided by operating activities was $890 million in the quarter under review. Capital expenditures and FCF totaled $212 million and $678 million, respectively.

2023 Projections

For full-year 2023, the company anticipates net sales within $16.7-$17.5 billion, indicating year-over-year growth of 7-12%. Importantly, BorgWarner envisions electric vehicle revenues of around $1.5 billion-$1.8 billion for 2023, markedly up from $870 million in 2022.

Adjusted operating margin is expected in the band of 8.6-9%. Adjusted net earnings are estimated to be within $4.5-$5 per share. Free cash flow is projected in the band of $550-$650 million.

Zacks Rank & Key Picks

BorgWarner currently has a Zacks Rank #3 (Hold).

A few top-ranked players in the auto space include Mercedes-Benz Group AG MBGAF, Wabash National WNC and BMW AG BAMXF, all of which sport a Zacks Rank #1 (Strong Buy).

Mercedes-Benz develops, manufactures and sells passenger cars, including premium and luxury vehicles. The Zacks Consensus Estimate for MBGAF’s 2023 sales implies year-over-year growth of 3.57%.

Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings implies year-over-year growth of 13.06% and 24%, respectively.

BMW is a multi-brand automobile manufacturer that focuses on the premium segments of the worldwide automobile and motorcycle markets. The Zacks Consensus Estimate for BAMXF’s 2023 sales implies year-over-year growth of 1.88%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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