BorgWarner Inc. BWA reported adjusted earnings of $1.09 per share for third-quarter 2024, up from 98 cents recorded in the prior-year quarter. The bottom line also surpassed the Zacks Consensus Estimate of 92 cents. The automotive equipment supplier reported net sales of $3.45 billion, which missed the Zacks Consensus Estimate of $3.53 billion. The top line also declined 5% year over year.
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Effective July 1, 2024, BorgWarner reorganized its business units and management structure to better support its Charging Forward strategy. It now has four reportable segments: Turbos & Thermal Technologies, Drivetrain & Morse Systems, PowerDrive Systems (formerly known as ePropulsion), and Battery & Charging Systems.
Turbos & Thermal Technologies: Net sales totaled $1.38 billion in the reported quarter compared with $1.47 billion in the year-ago period. Adjusted operating income of $202 million declined from $214 million recorded in the year-ago quarter.
Drivetrain & Morse Systems: Net sales totaled $1.36 billion in the reported quarter compared with $1.44 billion in the year-ago period. Adjusted operating income of $251 million decreased from $253 million recorded in the year-ago quarter.
PowerDrive Systems: Sales from the segment were $512 million, which declined from $571 million a year ago. The segment incurred an adjusted operating loss of $19 million compared with an operating loss of $20 million in the corresponding period of 2023.
Battery & Charging Systems: Sales from the segment were $197 million, which increased from $146 million a year ago. The segment incurred an adjusted operating loss of $8 million, narrower than an operating loss of $26 million in the corresponding period of 2023.
As of Sept. 30, 2024, BorgWarner had $2 billion in cash/cash equivalents/restricted cash compared with $1.53 billion as of Dec. 31, 2023. As of the end of third-quarter 2024, long-term debt was $4.2 billion, up from $3.7 billion recorded as of Dec. 31, 2023.
Net cash from operating activities from continuing operations was $356 million in the quarter under review. Capital expenditures and free cash flow totaled $155 million and $201 million, respectively.
For full-year 2024, the company now anticipates net sales in the band of $14-$14.2 billion, down from the previous estimate of $14.1-$14.4 billion.
Adjusted operating margin is expected in the band of 9.8-10%, up from the previous estimate of 9.6-9.8%. Adjusted earnings are now estimated in the range of $4.15-$4.30 per share compared with the previously estimated range of $3.95-$4.15 per share. The operating cash flow forecast remains unchanged in the range of $1,325-$1,375 million. Free cash flow is projected in the band of $475-$575 million.
The company expects its eProduct sales to be around $2.4 billion, up from approximately $2 billion in 2023.
BorgWarner currently carries a Zacks Rank #3 (Hold). Some top-ranked players in the auto space are Tesla TSLA, Toyota TM and REE Automotive REE, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TSLA’s 2024 and 2025 EPS has moved north by 18 cents and 12 cents, respectively, in the past seven days.
The Zacks Consensus Estimate for TM’s 2024 and 2025 EPS has moved north by 56 cents and 65 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for REE’s 2024 and 2025 earnings indicates a year-over-year uptick of 64% and 13.3%, respectively.
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