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Reported Revenue: $3.595 billion, marking a 6% increase year-over-year, surpassing the estimated $3.509 billion.
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Adjusted EPS: $1.03, significantly above the estimated $0.87, reflecting a robust performance against analyst expectations.
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Net Income: Reported at $213 million, exceeding the estimated $203.55 million.
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Share Repurchase: Announced an additional authorization of up to $500 million over the next three years, enhancing shareholder value.
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Full-Year EPS Guidance: Increased to a range of $3.80 to $4.15 per diluted share, excluding non-recurring items, indicating confidence in continued strong performance.
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Free Cash Flow: Reported a negative $308 million, reflecting significant investment and operational activities.
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Global Contracts: Secured significant contracts with XPeng and a major European OEM for advanced electric vehicle components, bolstering future growth prospects in the e-mobility sector.
BorgWarner Inc. (NYSE:BWA) released its 8-K filing on May 2, 2024, revealing a robust first quarter performance for the fiscal year 2024. The company, a leading Tier I auto-parts supplier, reported a notable increase in earnings per share (EPS) and net sales, surpassing analyst expectations for the quarter.
Company Overview
BorgWarner operates through three segments: Air Management, Drivetrain and Battery Systems, and ePropulsion. The company’s products include turbochargers, e-motors, and battery systems, serving major automakers like Ford and Volkswagen. With a significant presence in Europe, Asia, and North America, BorgWarner is strategically positioned in key automotive markets.
Financial Highlights
The company reported U.S. GAAP net sales of $3,595 million, a 6% increase from the first quarter of 2023. This growth was primarily driven by heightened demand for BorgWarner’s innovative products, although partially offset by negative foreign currency impacts. Notably, the reported EPS of $0.93 per diluted share significantly exceeded the analyst estimate of $0.87.
Adjusted for non-comparable items, the adjusted net earnings per diluted share stood at $1.03, reflecting a robust improvement from $0.81 in the same quarter of the previous year. These adjustments accounted for restructuring expenses and other non-recurring costs. The company’s operational efficiency is further underscored by an adjusted operating income of $339 million, or 9.4% of net sales, compared to 8.2% on a GAAP basis.
Strategic Developments and Market Expansion
BorgWarner also announced key contract wins with XPeng and a major European OEM for the supply of high-voltage hairpin (HVH) eMotors and electric Torque Vectoring Disconnect (eTVD) systems, respectively. These agreements highlight BorgWarner’s competitive edge in the electric vehicle (EV) components market and align with its growth strategy in the e-mobility sector.
Share Repurchase and Financial Outlook
The Board of Directors has approved a new share repurchase program, authorizing up to $500 million over the next three years, in addition to the existing $267 million authorization. This move reflects confidence in the company’s financial health and a commitment to delivering shareholder value.
For the full year 2024, BorgWarner expects net sales to range between $14.4 billion and $14.9 billion, with an adjusted EPS forecast of $3.80 to $4.15, marking an increase from previous projections. This guidance anticipates organic sales growth of 2% to 5%, despite potential challenges from foreign exchange rates and global market conditions.
Investor and Analyst Perspectives
Analysts might view BorgWarner’s Q1 performance and positive full-year guidance as indicators of the company’s resilient business model and effective management strategy, particularly in navigating the complexities of the global automotive supply chain and the shift towards electrification.
In conclusion, BorgWarner’s first-quarter results not only demonstrate a strong start to 2024 but also reinforce the company’s trajectory towards sustained growth in the evolving automotive industry. With strategic expansions in the EV market and a robust financial position, BorgWarner is well-equipped to continue its momentum.
For further details, investors and interested parties can access the earnings call presentation and additional financial information on the BorgWarner website at BorgWarner Investors.
Explore the complete 8-K earnings release (here) from BorgWarner Inc for further details.
This article first appeared on GuruFocus.